[Good Morning Market] Can the Korean Stock Market Overcome AI Bubble Concerns and Strong Dollar Pressure Ahead of the Holiday?

On September 25, the domestic stock market is expected to experience sector rotation as it digests the effects of the recent correction in the U.S. stock market and the strong dollar.

Previously, on September 24 (local time), the New York stock market closed lower across the board amid growing concerns about a potential artificial intelligence (AI) bubble and heightened caution ahead of economic indicators to be released this week. The Dow Jones Industrial Average, which is focused on blue-chip stocks, fell by 171.5 points (0.37%) to close at 46,121.28. The S&P 500 Index, which tracks large-cap stocks, declined by 18.95 points (0.28%) to 6,637.97, and the Nasdaq Index, which is centered on technology stocks, dropped by 75.618 points (0.34%) to 22,497.855.

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Choi Bowon, a researcher at Korea Investment & Securities, commented, "Profit-taking occurred mainly among companies that had seen significant short-term rebounds," and added, "Although Federal Reserve Chair Jerome Powell's remarks about 'overvalued stock prices' and concerns over slowing growth in AI companies came to the forefront, the market was more influenced by a temporary pause ahead of the scheduled releases of GDP and personal consumption expenditures (PCE) data this week."

Today, the domestic stock market is also expected to see a tug-of-war in supply and demand, as bargain hunting emerges following the previous day's declines amid the impact of the U.S. market correction.

Lee Sunghoon, a researcher at Kiwoom Securities, noted, "In the short term, the domestic stock market is likely to remain in a consolidation phase without a clear direction for the rest of September," and emphasized, "Especially with the record-long Chuseok holiday (October 3-9) approaching, it is important to consider the possibility of preemptive profit-taking sales as investors rebalance their portfolios following the recent rally."

The research center at iM Securities also pointed out, "As concerns over the AI rally grow, risk appetite has weakened, leading the Philadelphia Semiconductor Index to close slightly lower, which is expected to have an unfavorable impact on the domestic stock market." The center further stated, "Given that the KOSPI is currently in the 3,470 range with high valuation pressure, investors should be mindful of profit-taking sales ahead of the Chuseok holiday in October."

In the Seoul foreign exchange market, the won-dollar exchange rate recorded 1,397.50 won, and surged to 1,403.80 won in the overnight market, which is considered a negative factor for foreign investor flows. The likelihood that the third amendment to the Commercial Act, which was expected to pass this month, will be delayed until November or early next year is also expected to weaken domestic policy momentum and limit index gains.

The market's attention is now turning to U.S. economic indicators. Today, the final figure for the U.S. second-quarter GDP will be released, and on September 26, the U.S. August PCE price index will be announced.