[Good Morning Market] U.S. Stocks Hit Record Highs..."Korea Eyes Further Foreign Inflows and Semiconductors"

September KOSPI Sees Inflows Led by Foreign Investors
"Further Room for Additional Foreign Investment"
..."Upward Trend Expected to Continue Despite Valuation Pressure"

With the New York stock market closing higher on the back of the U.S. Federal Reserve's resumption of interest rate cuts, the Korean stock market is also expected to continue its moderate upward trend on September 19. The securities industry is paying close attention to variables such as the sustainability of foreign capital inflows and the concentration of demand in the semiconductor sector.

On the 18th (local time), all three major indices on the New York Stock Exchange hit record highs. The Dow Jones Industrial Average, which focuses on blue-chip stocks, closed at 46,142.42, up 124.1 points (0.27%) from the previous session. The S&P 500 Index, which tracks large-cap stocks, rose 31.61 points (0.48%) to 6,631.96, while the Nasdaq Index, which is centered on technology stocks, jumped 209.399 points (0.94%) to close at 22,470.725.

On the 18th (local time), traders are working at the New York Stock Exchange in the United States. Photo by Reuters Yonhap News

Amid expectations of benefits from the interest rate cut, the Russell 2000 Index, which is comprised of small and mid-cap stocks, surged 60.352 points (2.51%) to 2,467.697, breaking its highest level in about three years and ten months. Compared to large corporations, small and mid-sized companies, which have less cash and rely more heavily on external funding such as loans, are considered to benefit more from interest rate cuts. Intel soared by an impressive 22.77% on news of an investment from Nvidia. Nvidia also rose 3.49%. Apple fell 0.46%, while Tesla and Microsoft (MS) dropped by 2.12% and 0.31%, respectively.

The previous day, the Fed decided at its regular Federal Open Market Committee (FOMC) meeting to lower the federal funds rate by 0.25 percentage points to an annual range of 4.0-4.25%. This move, which came after nine months of maintaining a freeze, was prompted by recent weak employment indicators. The Fed also signaled the possibility of two additional 0.25 percentage point rate cuts within the year, for a total of 0.5 percentage points.

Regarding the outlook for the Korean stock market on this day, Lee Sunghoon, a researcher at Kiwoom Securities, said, "Despite the price burden amid record highs, a moderate upward trend is expected to continue, supported by U.S. interest rate cuts, expectations for improved semiconductor earnings, and the president's commitment to supporting the stock market."

He highlighted the inflow of funds led by foreign investors and investment sentiment in the semiconductor sector. He added, "If we look at the trends by supply and demand participant in KOSPI this month, foreign capital inflows stand out," and continued, "The foreign ownership ratio in KOSPI is currently at 32.9%, which is still below the 35% level of July last year, indicating there is still room for further inflows."

He further explained, "Of the total net foreign purchases of 6.9 trillion won this month, about 86% (6 trillion won) has been concentrated in the semiconductor sector," and added, "With continued positive developments in the semiconductor industry, there could be a continued short-term concentration of demand in semiconductors."