KOSPI Rebounds Past 6,800 After 'Warsh Shock' as Samsung Electronics and SK hynix Lead Recovery

Plunged 3.55% Early in the Session to 6,547;
Closed Up 0.46% at 6,820.02

Probability of US Rate Hike in September Jumps to 57%;
Other Legal Entities Net-Buy 1.5 Trillion Won, Supporting the Index

The KOSPI, which had plummeted more than 3% at the start of the session on concerns about additional rate hikes by the U.S. Federal Reserve (Fed), rebounded and reclaimed the 6,800 level, supported by share buybacks from Samsung Electronics and SK hynix. However, as foreigners, institutions, and retail investors all sold stocks, analysts note that the rebound cannot be simply interpreted as a recovery in overall investor sentiment.

On the 31st, the status board in the dealing room at the Hana Bank headquarters in Jung-gu, Seoul, displayed the KOSPI and the won/dollar exchange rate. On that day, the KOSPI closed at 6,820.02, up 31.14 points (0.46%) from the previous session. Meanwhile, the won/dollar exchange rate also fell to the 1,360 won range during the session for the first time in 13 months. Yonhap News Agency

According to the Korea Exchange on August 31, the KOSPI closed at 6,820.02, up 31.14 points (0.46%) from the previous trading session. The index opened at 6,613.58, down 2.58%, and quickly slipped to as low as 6,547.76 after the market opened, widening the decline to 3.55%. Later, the market gradually pared losses before turning positive near the close. The day's intraday high-low fluctuation exceeded 272 points.

The factor that froze investor sentiment in the early session was the hawkish remarks by Federal Reserve Chair Kevin Warsh. On August 28 (local time), at the Jackson Hole Economic Policy Symposium, Chair Warsh stated that if the inflation rate does not move toward the Fed's target at a sufficiently rapid pace, further action would be necessary.

The market interpreted this as leaving open the possibility of another rate hike. In the federal funds rate futures market, the probability of a 0.25 percentage point rate hike at the September Federal Open Market Committee (FOMC) meeting rose from 35.4% before the speech to around 57%. The rise in U.S. Treasury yields and the sharp 3.47% decline in the Philadelphia Semiconductor Index on August 28 also weighed on the Korean stock market. In addition, the increase in international oil prices due to escalating military tensions between the United States and Iran further dampened appetite for risk assets.

However, the Korean stock market regained stability quickly as the afternoon progressed. The stabilization in U.S. Treasury yields and the reversal to gains by Samsung Electronics and SK hynix helped lift the index. Samsung Electronics closed at 260,000 won, up 1.17%, while SK hynix ended the session at 1,674,000 won, up 1.27%.

In particular, share buybacks by the two companies helped prop up the index's lower range. Samsung Electronics and SK hynix each announced through disclosures that they would buy back 2 million and 650,000 shares, respectively, on the open market. As a result, other legal entities—presumably reflecting these buybacks—were net buyers of over 1.5 trillion won. In contrast, foreigners, institutions, and retail investors all ended as net sellers.

With the exception of semiconductors, results diverged by sector. LG Energy Solution, Samsung Biologics, and Samsung Electro-Mechanics showed gains, and the electrical/electronics and chemicals sectors also rose. In contrast, the construction, machinery and equipment, and metals sectors closed with losses of around 3%. The KOSDAQ index stood at 834.29, down 4.12 points (0.49%).

In the market, there are views that while Chair Warsh's remarks could increase market volatility for a while, further downside may be limited. This is because a significant portion of the September rate hike expectations is already priced into stock prices, and if corporate earnings—especially in the semiconductor sector—remain solid, the pressure from higher rates could be partially offset.

Kyungmin Lee, an analyst at Daishin Securities, said that even taking into account the rise in rates, the KOSPI is currently in an undervalued zone and, if the September rate hike is reflected in advance, further downside should be limited. The market's focus is expected to shift to the August trade statistics to be announced on September 1, as well as U.S. employment and inflation data.

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