[Market ING] KOSPI Welcomes September, Expected to Attempt a Rebound

Weekly KOSPI Expected Band 2600~2720

After closing a highly volatile August, the stock market is expected to attempt a rebound this week (September 2-6) as it digests key economic indicators.

[Image source=Yonhap News]

Last week, the KOSPI fell by 1.01% and the KOSDAQ by 0.72%. Ahead of Nvidia's earnings announcement, a cautious stance prevailed, and following the earnings release, disappointment led to a weak stock performance, resulting in a week-long trend that fell short of expectations. Kang Jin-hyuk, a researcher at Shinhan Investment Corp., explained, "Ahead of last week's main event, Nvidia's earnings announcement, a strong wait-and-see mood continued, leading to a box-range movement. Amid declining trading volume, the KOSPI, which was fluctuating in the mid-to-late 2600 range, is now testing support near the 200-day moving average."

This week, the market is expected to attempt a rebound as it reviews key economic indicators. Lee Kyung-min, a researcher at Daishin Securities, said, "In the first week of September, the KOSPI will attempt a rebound after resolving short-term overheating and digesting sell-offs over the past two weeks. With still strong Korean export momentum, a rebound in the U.S. manufacturing index, and improvements in employment data, the KOSPI is highly likely to break through the 2700 level."

Following Nvidia's earnings announcement, the market showed disappointment and related stocks weakened, prompting opinions that a short-term strategy focusing on sectors other than semiconductors is necessary. Kim Young-hwan, a researcher at NH Investment & Securities, stated, "Although Nvidia's Q2 earnings exceeded consensus (the average forecast of securities firms), the stock price declined, indicating that investors need to further adjust their expectations regarding AI momentum. In the Korean stock market, short-term trading should focus on sectors other than semiconductors. Attention should be paid to growth stock trading (healthcare, secondary batteries) driven by interest rate cuts, value-up related sector trading (finance) following the value-up index announcement, and U.S. new government policy trading that may follow the U.S. presidential TV debates." NH Investment & Securities projected the KOSPI range for this week to be between 2600 and 2720.

Key schedules for this week include South Korea's August export-import trends on the 1st, China's August Caixin Purchasing Managers' Index (PMI) on the 2nd, South Korea's August Consumer Price Index (CPI) and the U.S. Institute for Supply Management (ISM) manufacturing report on the 3rd. On the 5th, the U.S. Federal Reserve's Beige Book will be released along with South Korea's finalized Q2 Gross Domestic Product (GDP), U.S. August ADP employment data, and U.S. August ISM non-manufacturing data. On the 6th, the U.S. August employment report will be published. Kang Jin-hyuk noted, "It is necessary to check whether export sectors, which had adjusted due to the recent won appreciation narrative, can rebound by confirming the numbers through the August export-import trends. Since Fed Chair Jerome Powell emphasized the dual mandate (price stability and full employment), the market will react sensitively depending on the results of the August employment report." Lee Kyung-min added, "Although most recently released economic indicators show weakness in employment sub-items, this is a burden but also reflects that fears of a recession caused by worsening employment have already been priced in. Simply confirming that employment is not at a recession level could further ease market anxiety."