[Market ING] KOSPI Slips to 6,600, Focus Turns to U.S. Inflation Data

The KOSPI fell for three consecutive days last week, dropping into the 6,600 range. Despite strong corporate earnings, it has been unable to stabilize above the 7,000 mark amid concerns over oil prices and interest rates.

Yonhap News Agency

Last week, the KOSPI and KOSDAQ fell 5.39% and 0.11%, respectively. “On October 8, the KOSPI opened higher on Samsung Electronics’ better-than-expected earnings, but fell for a third consecutive trading day as foreign and institutional investors continued selling large-cap stocks,” said Lee Jaewon, a researcher at Yuanta Securities. “With falling oil prices alone insufficient to stabilize interest rates, concerns over the supply of government bonds and AI corporate bonds persist. The burden from oil prices and interest rates, together with uncertainty over supply and demand, is outweighing the positive effects of improving earnings.”

Continued selling by foreign investors is dragging down the index. They have already sold more than 6 trillion won worth of shares this month. “On October 8, the KOSPI fell below its 60-day moving average for the first time in 10 days and also broke below the lower boundary of its uptrend line, which had held since August,” said Kang Jinhyeok, a researcher at Shinhan Securities. “The 15 trillion won share buyback by Samsung Electronics, which had supported the index, ended on October 6, and SK hynix’s buyback is also nearing its end. As a result, the impact of foreign investors’ selling could grow.” He added, “The break below the trend line on October 8 was not entirely unrelated to these developments, but it remains to be seen whether it was a short-term break driven by supply-and-demand factors.”

“Rather than trying to predict when foreign investors will return, investors should respond by watching for signs of a change,” Lee Jaewon said. “They should look for a slowdown in the rise in long-term U.S. interest rates and a calming of bond market volatility, as well as a reduction in foreign investors’ selling of spot and futures, a moderation in non-arbitrage program selling, and an improvement in supply and demand for large-cap semiconductor stocks.”

Some analysts say investors should focus on small- and mid-cap stocks for the time being. “At this point, alpha strategies focused on more nimble small- and mid-cap stocks are effective,” said Kim Jongmin, a researcher at Samsung Securities. “It would be reasonable to time investments in the two major semiconductor companies for after the expected resolution of macroeconomic uncertainties around the November midterm elections and confirmation that the index has broken through its trend line.”

With concerns over interest rates persisting, the market is expected to focus on the release of U.S. inflation data. “If the September Consumer Price Index (CPI) confirms another slowdown in inflation, it is expected to ease inflation concerns and help bring bond yields down and stabilize them,” said Lee Kyungmin, a researcher at Daishin Securities. “Based on the Inflation Now consensus, September CPI is currently estimated at 2.39% year over year (2.4% in August) and 0.2% month over month (0.3% in August).”

Key events this week include the release of the U.S. September CPI on October 14 and the U.S. September Producer Price Index (PPI) and retail sales figures on October 15.

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