[Good Morning Stock Market] "KOSPI Hits Its Lowest Point... Rising Hopes for a Rebound"

The Korean stock market is expected to rebound on the 3rd. This outlook reflects bargain buying of the index, which has fallen to very low levels, along with the rise in the U.S. semiconductor index and expectations of a recovery in the Chinese economy.

Reuters Yonhap News

On the 2nd (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 44,782, down 128.65 points (0.29%) from the previous trading day. Meanwhile, the large-cap-focused S&P 500 rose 14.77 points (0.24%) to 6,047.15, and the tech-heavy Nasdaq gained 185.78 points (0.97%) to close at 19,403.95, each reaching record highs.

By stock, Tesla rose 3.46% on news of releasing an upgraded version of its Full Self-Driving (FSD) software, which is being developed with the goal of autonomous driving. Additionally, U.S. server manufacturer Super Micro, which had faced accounting fraud allegations, surged 28.68% after stating that no evidence of accounting fraud was found.

The October Institute for Supply Management (ISM) Manufacturing Purchasing Managers' Index (PMI) released that day was 48.4. This exceeded both the previous month’s figure (48.5) and expert forecasts (48.8). Although it remains below 50, indicating continued economic contraction, it was better than expected. A manufacturing PMI above 50 signals economic expansion, while below 50 indicates contraction.

The domestic stock market will need to pay attention to the impact of the U.S. Department of Commerce’s controls on high-bandwidth memory (HBM) exports to China. The Bureau of Industry and Security (BIS) of the U.S. Department of Commerce added certain HBM products to the list of export-controlled items. Ji-won Kim, a researcher at KB Securities, explained, "The U.S. Department of Commerce has added HBM products to the list of export-controlled items targeting China," adding, "Attention is needed regarding the impact on Samsung Electronics, which exports some of these products to China."

Also, as the domestic stock market valuation has dropped to very low levels, the possibility of a rebound is being anticipated. Ji-young Han, a researcher at Kiwoom Securities, noted, "It is important to pay attention to the fact that at a trailing price-to-book ratio (PBR) valuation level below 0.87 times, the practical benefits of selling are greatly reduced," adding, "This level largely reflects the foreseeable negative factors at present, and the market should remain open to reacting more sensitively to positive factors than to negative ones."

Expectations for a rebound are emerging mainly among export stocks. Researcher Han said, "Supported by the rise in the U.S. Philadelphia Semiconductor Index and expectations of a recovery in the Chinese economy, export stocks are expected to lead the rebound," adding, "The decline in the U.S. 10-year Treasury yield and easing of interest rate burdens are also expected to create a favorable environment across growth stocks."