[Market ING] KOSPI Seeks Rebound in Superweek Packed with Corporate Earnings and FOMC

Weekly KOSPI range forecast: 5,100-6,400 points

The KOSPI, which swung up and down last week, closed the week above the 5,500 level. This week, major companies in South Korea and abroad are set to report earnings, and major central banks are scheduled to hold monetary policy meetings, including the U.S. Federal Open Market Committee (FOMC). The KOSPI is expected to digest these developments and look for opportunities to rebound.

Yonhap News

Last week, the KOSPI and KOSDAQ fell 2.08% and 5.42%, respectively. "The KOSPI is searching for direction around the 5,500 level," said Lee Kyungmin, a researcher at Daishin Securities. "The recent sharp decline was the result of concerns about macroeconomic headwinds, AI-related credit and profitability piling up, rather than a deterioration in fundamentals."

"Amid concerns over Chinese memory chipmaker ChangXin Memory Technologies (CXMT) catching up technologically and a sharp rise in CoreWeave's credit default swap (CDS) premium, the KOSPI fell into the 5,000 range. Related concerns persisted last week, limiting a rebound," said Na Jeonghwan, a researcher at NH Investment & Securities. "However, positive news also emerged: SpaceX forecast that computing demand would increase and supply shortages would continue in its earnings announcement, while Supermicro reported strong earnings. As a result, the KOSPI fluctuated in the 5,000 range."

With major big tech companies set to report earnings this week, the market is likely to assess the sustainability of AI investment, among other factors. Microsoft and Alphabet will report earnings on the 28th, followed by Amazon, Intel and SanDisk on the 29th. In South Korea, SK hynix is scheduled to report earnings on the 28th and Samsung Electronics on the 29th. "When reviewing big tech earnings, investors need to focus not only on the growth of AI businesses but also on whether investment can be sustained," Lee said. "As seen in the recent earnings announcements from SpaceX, Supermicro, Meta and Tesla, if robust AI growth is accompanied by evidence of investment returns and sustainability, concerns about AI-related credit and profitability will ease, strengthening the momentum behind a stock market rebound."

The market is closely watching for further shareholder returns in the earnings announcements from Samsung Electronics and SK hynix. "SK hynix's share buyback has now ended, leaving no major source of demand to absorb foreign investors' selling," Lee said. "If the two leading semiconductor companies announce shareholder return plans, they are expected to fill the gap in market demand and provide support for the stock market."

Na also said, "The KOSPI's recent decline stems not from a deterioration in fundamentals but from the absence of buyers able to absorb foreign investors' selling." He added, "SK hynix is estimated to have more than 30 trillion won available for additional shareholder returns. If a large-scale share buyback is confirmed, buying by other corporations will absorb some of the foreign selling, easing the imbalance in supply and demand on the KOSPI." NH Investment & Securities forecast a KOSPI range of 5,100 to 6,400 this week.

The FOMC meeting is also on the agenda. The benchmark interest rate is expected to remain unchanged at the October FOMC meeting. "According to CME FedWatch, the probability of a rate hold is 87.27%, so the market's focus will be on the future path of monetary policy rather than the rate decision itself," Lee said. "The U.S. Consumer Price Index (CPI) for September came in stronger than expected, and rising international oil prices are also adding to inflationary pressure. If the Federal Reserve's tightening path becomes more aggressive, it could constrain a stock market rebound."

"This week will be an important turning point for testing the sustainability of the rebound," said Lee Jaewon, a researcher at Yuanta Securities. "Earnings from South Korean semiconductor companies and U.S. hyperscalers will provide insight into the sustainability of AI investment and earnings forecasts, while the FOMC and the U.S. midterm elections could potentially ease uncertainty over interest rates and policy." He added, "We should maintain our existing holdings centered on semiconductors and our alpha strategy in materials, parts and equipment, as well as energy storage systems (ESS). However, any aggressive increase in positions should come only as foreign selling subsides, institutional buying proves sustainable, AI credit risk stabilizes and actual shareholder returns expand."

Key events this week include the release on the 26th of the Federal Reserve Bank of Dallas's September manufacturing index. On the 27th, South Korea will release its third-quarter gross domestic product (GDP), and the United States will release the Conference Board's October Consumer Confidence Index. On the 29th, the U.S. October FOMC meeting and the European Central Bank's (ECB) October monetary policy meeting will take place. The United States will also release its September Personal Consumption Expenditures (PCE) price index and third-quarter GDP. On the 30th, the Bank of Japan (BOJ) will hold its October monetary policy meeting.

Corporate earnings announcements will also continue. In the United States, Nucor and Verizon will report earnings on the 26th; Boeing, Visa, Seagate, Coca-Cola and PayPal on the 27th; Microsoft, Alphabet, FedEx and Ford on the 28th; SanDisk, Amazon, Intel, Merck, Starbucks and Eli Lilly on the 29th; and Chevron and ExxonMobil on the 30th. In South Korea, HD Construction Equipment, Industrial Bank of Korea and BNK Financial Group will report earnings on the 26th; HD Hyundai Electric, JB Financial Group, iM Financial Group, LG Innotek, Samsung Card, Shinhan Financial Group and Hanwha Systems on the 27th; SK hynix, LG Electronics, OCI, SKC, Samsung C&T, Doosan Fuel Cell and Samsung Electro-Mechanics on the 28th; Samsung Electronics, KB Financial Group, SK Innovation, Doosan Robotics, Samsung SDI, Samsung Heavy Industries and Hanwha Aerospace on the 29th; and Kia, APR, Hyundai Engineering & Construction and Hyundai Mobis on the 30th. These companies will report their third-quarter earnings.

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