[Market ING] KOSPI After Passing Peak Anxiety, Will the Rebound Continue?

Weekly KOSPI Expected Band 2420~2540 Range

Last week, the KOSPI regained some stability and recovered the 2500 level. Attention is focused on whether the upward trend can continue this week (November 25-29). As anxiety appears to have peaked and stability is being restored, there are forecasts that a technical rebound is possible until the end of the year.

On the 22nd, the KOSPI index closed at 2,501.24, up 20.61 points (0.83%), settling above the 2,500 mark, as dealers worked in the dealing room at the Hana Bank headquarters in Jung-gu, Seoul. The KOSDAQ index fell 3.66 points (0.54%) to 677.01, and the USD/KRW exchange rate closed at 1,401.8 won, up 4.3 won. Photo by Kang Jin-hyung

Last week, the KOSPI rose by 3.49%, while the KOSDAQ fell by 1.23%. Lee Kyung-min, a researcher at Daishin Securities, explained, "The KOSPI successfully rebounded based on support at the 2400 level. Anxiety has passed its peak in the severely undervalued zone. From early in the week, the easing of Trump-related uncertainties calmed the rise in the dollar and government bond yields. Additionally, Samsung Electronics, which was at the center of the KOSPI's level-down, rebounded, the value-up fund was launched, and year-end dividend expectations all contributed to strengthening the rebound."

Last week's rebound seems to have been influenced by Samsung Electronics' rebound following the announcement of a 10 trillion won scale share buyback plan, which also affected the KOSPI. However, foreign investors' selling pressure on Samsung Electronics remains unchanged. Kang Dae-seok, a researcher at Yuanta Securities, analyzed, "The KOSPI's recovery last week appears to have been triggered by Samsung Electronics falling below 50,000 won and then quickly rebounding into double digits after the share buyback announcement. However, it is judged that foreign investors' views on Samsung Electronics have not significantly changed, as net buying turned positive for a day but then net selling continued." He added, "Although the index seems to have bottomed out, the reason why sentiment has not yet revived is interpreted as such."

Given the prolonged downtrend, there are forecasts that a technical rebound can be expected until the end of the year. Researcher Kang said, "The KOSPI has fallen in 8 out of 11 months so far this year, especially showing a continuous decline for 5 months since July. Five or more consecutive months of decline have occurred only five times in the past 25 years, including this time. We judge that the domestic stock market is in a zone where a technical rebound is possible until the end of the year."

For a strong upward trend in the KOSPI, the U.S. year-end shopping season is expected to be important. Kim Young-hwan, a researcher at NH Investment & Securities, said, "Foreign investors have continued net selling on every trading day in November except for one day, and despite Samsung Electronics' share buyback announcement, they have remained focused on selling. Concerns about semiconductor profit momentum slowdown and policy uncertainties from the U.S. still suppress foreign investor sentiment. For the KOSPI to surpass the 2500 level and show a strong upward trend, demand for IT products during the U.S. year-end shopping season needs to be stronger than expected, or policy uncertainties after the inauguration of the new U.S. administration need to ease." He added, "Currently, it is still judged that a sector-focused approach that avoids Trump-related risks is effective." NH Investment & Securities has set the expected KOSPI band for this week at 2420 to 2540.

Key schedules for this week include the release of the U.S. Conference Board Consumer Confidence Index for November, U.S. durable goods orders for October, and the revised U.S. GDP for Q3 on the 27th. On the 28th, the U.S. Personal Consumption Expenditures (PCE) Price Index and the Bank of Korea's Monetary Policy Committee regular meeting are scheduled. On the 29th, South Korea's October Industrial Activity Trend will be announced, and on the 30th, China's National Bureau of Statistics Purchasing Managers' Index (PMI) for November will be released. Additionally, the U.S. stock market will be closed on the 28th for Thanksgiving and will close early on the 29th for Black Friday. Researcher Lee noted, "The expected rebound in the PCE and core PCE on the 28th is a factor to watch." He analyzed, "The PCE, which had nearly reached the inflation target with a 2.1% year-on-year increase in September, is expected to rebound to 2.3% in October. However, the absolute figure is still close to the 2% inflation target, so unless the result significantly exceeds expectations, it will not be a shock variable."