[Market ING] KOSPI Fails to Reclaim 6,000, Focus on U.S. Midterm Elections

Weekly KOSPI Forecast Range: 5,700-6,500 Points

The KOSPI posted a sharp gain last week, recovering the 6,000-point level, but then fell for two consecutive days and dropped back below 6,000. With the U.S. midterm elections and employment data releases scheduled for this week, the market is expected to digest the results and look for opportunities to rebound.

Yonhap News Agency

The KOSPI rose 3.25% last week, while the KOSDAQ fell 3.63%. Lee Kyungmin, a researcher at Daishin Securities, said, "The KOSPI dropped back below 6,000 again amid mixed earnings from major companies," adding, "With market attention still focused on artificial intelligence (AI) and semiconductor companies, shifts in investor sentiment in response to earnings results are acting as a key factor driving KOSPI fluctuations."

One view is that, given the current state of market jitters, investors should watch how the market responds after major events and adjust their strategies accordingly. Kim Jongmin, a researcher at Samsung Securities, said, "Market pressure to the downside is mounting as disappointing earnings from big tech companies compound an already challenging macroeconomic environment," adding, "With investor sentiment severely chilled, fear is dominating the market: positive fundamentals are being ignored, while bad news is being magnified. Rather than rushing into investment decisions amid the current climate of fear, it is more prudent to see how the market responds after the upcoming key event, the U.S. midterm elections, and then adjust accordingly."

Last week, foreign investors made net purchases in the securities market for three consecutive days, briefly raising hopes that they would return to buying. They then resumed heavy selling, driving the index lower. Lee Jaewon, a researcher at Yuanta Securities, said, "The resumption of large-scale net selling by foreign investors means that it is still too early to conclude that the market is recovering its upward trend," adding, "The durability of a rebound will depend on whether the midterm elections this week ease policy uncertainty, whether U.S. economic data shift expectations for interest rate hikes, and whether credit risks among AI companies stabilize." He added, "Investors need to adjust how they respond while watching for a moderation in the intensity of foreign selling and renewed confidence in the sustainability of AI investment."

The U.S. midterm elections are scheduled for this week. Analysts expect that export controls on China will remain in place after the elections, maintaining the relative benefits for South Korean companies. Na Jeonghwan, a researcher at NH Investment & Securities, said, "With Democrats likely to regain control of the House of Representatives in the U.S. midterm elections for the House and Senate scheduled for November 3, expectations of a 'blue wave' are growing, as the possibility of Democrats taking a majority in the Senate has also recently come into focus." He added, "If this comes to pass, it could constrain the Trump Administration's legislative agenda and lead to efforts to curb increases in defense spending and expand social welfare budgets. However, as taking a firm stance toward China is a bipartisan policy, pressure centered on export controls on advanced technologies is likely to continue, meaning South Korean companies, including semiconductor firms, are likely to continue benefiting relative to their competitors after the midterm elections." NH Investment & Securities set its expected KOSPI range for this week at 5,700 to 6,500 points.

Some say investors should be more concerned about the possibility of a military clash between the United States and Iran after the elections than about the election results themselves. Lee said, "The election of either Democrats or Republicans could lead to differences in performance across sectors, but investors should be more concerned about the possibility of a military clash between the United States and Iran after the midterm elections." He noted, "There is a possibility that U.S. President Donald Trump could resume attacks on Iran after the midterm elections. If a military clash intensifies, it could drive up international oil prices and interest rates, amplifying volatility in the stock market."

Key events this week include the release of the U.S. Institute for Supply Management (ISM) Manufacturing Index for October on November 3, followed on November 4 by the U.S. Job Openings and Labor Turnover Survey (JOLTS) and ADP private-sector employment figures for October. The U.S. ISM Services Index for October will be released on November 5, followed by the U.S. employment report for October on November 6.

Companies will also continue to report earnings. In the United States, Apple and Palantir will report on November 2, AMD on November 3, and Qualcomm on November 4. In South Korea, POSCO Holdings and POSCO Future M will report on November 2; LG Energy Solution and Korea Aerospace Industries on November 3; SK Telecom on November 4; LG Chem, EcoPro BM, L&F, and Kakao on November 5; and CS Wind, LIG Defense & Aerospace, and Lotte Chemical on November 6. They will report their third-quarter results.

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