[Market ING] KOSPI Trapped in a Box Range, Stock-Picking Trend Expected to Continue

Weekly KOSPI Forecast Range: 6,400–7,500 Points

Last week, the KOSPI once again failed to regain the 7,000-point level. With a lack of short-term momentum, market watchers anticipate a period characterized by selective performance among individual stocks within a tight trading range.

Yonhap News Agency

During the past week, the KOSPI fell by 1.79%, while the KOSDAQ rose by 4.55%. Jongmin Kim, a researcher at Samsung Securities, commented, "In the absence of major events, the market remained calm," adding, "The market is digesting the direction of long-term interest rates from a macro perspective, as well as individual shareholder return policies and earnings from a micro perspective. As the upward trend in U.S. long-term interest rates has somewhat subsided and AI hardware and software companies such as Nvidia and Salesforce posted strong earnings, the downside rigidity of the equity market was reaffirmed."

A continued stock-picking market within a box range is expected for the time being. Kim observed, "With no short-term momentum to drive a sharp upward move in the index, the KOSPI has entered a short-term box range between 6,000 and 7,000 points. Although the index remains capped due to consolidation among the two major semiconductor stocks and leading stocks from the first half of the year, internal warmth and quality improvement are spreading actively within the market, as evidenced by 23 sectors having outperformed the KOSPI in the second half so far." He further noted, "A commonality among sectors showing strength against the index recently is the inflow of institutional funds. This suggests that yield competition among institutional investors has picked up as they seek to improve fund performance ahead of year-end book closing. Investors should actively respond to this stock-picking environment."

Rather than witnessing a steep rally, a step-wise upward trend is anticipated. Jaewon Lee, a researcher at Yuanta Securities, explained, "With the end of the second quarter's major earnings events, including Nvidia's results, market attention will shift to macro events ahead of the September Federal Open Market Committee (FOMC) meeting. A rapid V-shaped rebound in the index will be difficult, and the market is likely to climb gradually, absorbing volatility step-by-step."

With expectations that the market will focus on macro events, attention is likely to center on U.S. employment data scheduled for release this week. Junghwan Na, a researcher at NH Investment & Securities, stated, "The main event in September is the FOMC meeting (September 15–16), and much attention will be paid to the dot plot to be announced there. Accordingly, share prices will be highly sensitive to the results of August employment data (September 4) and the August Consumer Price Index (September 11), both of which could influence the FOMC's decisions." NH Investment & Securities presented a KOSPI forecast band of 6,400 to 7,500 points for this week.

Meanwhile, during a keynote speech at the Economic Policy Symposium held in Jackson Hole, Wyoming, on August 28 (local time), Kevin Warsh, Chair of the U.S. Federal Reserve, expressed serious concerns about ongoing inflation, indicating that additional tightening could be considered if inflation does not moderate sufficiently. The market interpreted this as a "hawkish" signal, leaving open the possibility of further interest rate hikes. According to CME FedWatch, the probability of a rate hike at the September Fed meeting, as reflected in the federal funds rate futures market, surged from 35.4% the previous day to 55.7% following the speech.

This week's key scheduled events include China's August Manufacturing Purchasing Managers' Index (PMI), which will be released on August 31. On September 1, data releases include Korea's August exports, the U.S. Institute for Supply Management (ISM) Manufacturing Index for August, and the U.S. July Job Openings and Labor Turnover Survey (JOLTS). On September 2, the U.S. August ADP private employment numbers will be released, followed by the U.S. August ISM Manufacturing Index on September 3, and the U.S. August employment report on September 4.

Researcher Kyungmin Lee pointed out, "Volatility stemming from the U.S. employment data is a factor to watch. While July employment figures showed a clear slowdown, if August employment turns out to be stronger than expected, the likelihood of additional Fed rate hikes could increase again, leading to upward pressure on bond yields. Given that the recent high levels of U.S. Treasury yields are capping stock market momentum, this is a risk factor that warrants caution."

This content was produced with the assistance of AI translation services.