[Market ING] KOSPI Breaks Through 3,900: Is 4,000 Next?

Weekly KOSPI Projected Range: 3,650 to 3,950

The KOSPI continued its record-breaking rally last week, settling above the 3,900 mark. Having reached historic highs each week, the KOSPI is now expected to challenge the 4,000 level this week.

Yonhap News Agency

Last week, the KOSPI rose by 5.14%, while the KOSDAQ climbed by 2.74%. Lim Jeongeun, a researcher at KB Securities, explained, "Amid expectations for easing US-China trade tensions, large-cap stocks led the strong performance, resulting in a weekly gain of 5.14% for the KOSPI and extending its upward trend for the third consecutive week."

Lee Kyungmin, a researcher at Daishin Securities, analyzed, "The KOSPI is breaking through key index levels one after another with its all-time high rally. Even as global stock markets take a breather, the KOSPI continues to outperform, with repeated inflows of bargain-hunting and bullish candlestick patterns appearing whenever there is a correction."

With several major events concentrated this week, the market is expected to focus on these developments. Lee noted, "The Asia-Pacific Economic Cooperation (APEC) summit (October 31 to November 1), President Donald Trump's visit to Korea from October 29 to 30, Korea-US trade negotiations, and the US-China summit will all determine the direction of the stock market this week. Although there are expectations for a trade deal, concerns over a 35 billion dollar investment are increasing exchange rate volatility, so whether the won-dollar exchange rate stabilizes after the negotiations will be a key factor in determining foreign investor flows."

Given the concentration of major events, the possibility of increased volatility cannot be ruled out. Lim pointed out, "A Korea-US summit is scheduled for October 29, ahead of the US-China summit on October 30. With the KOSPI nearing the 4,000 mark, uncertainty over Korea-US tariffs could act as a sudden variable."

While volatility may rise, some suggest that corrections should be met with buying. Na Jeonghwan, a researcher at NH Investment & Securities, said, "The KOSPI has delivered a return of 60.3% so far this year and 12.3% this month. The sharp short-term rise means that uncertainties such as Korea-US tariffs are being used as a justification for profit-taking. However, from October 1 to 20, the average daily export value increased by 9.7% year-on-year, and domestic investor deposits have surpassed 80 trillion won, indicating ample liquidity. As both earnings and liquidity are trending positively, it is reasonable to respond to short-term corrections with buying." NH Investment & Securities suggested a projected KOSPI band of 3,650 to 3,950 for this week.

This week’s major scheduled events include the US September durable goods orders on October 27 and the US October Conference Board Consumer Confidence Index on October 28. On October 30, the US Federal Open Market Committee (FOMC) meeting is scheduled, along with the release of the US third-quarter gross domestic product (GDP). The European Central Bank (ECB) October monetary policy meeting and the Bank of Japan (BOJ) October monetary policy meeting will also be held. On October 31, the US September personal consumption expenditures (PCE) price index and China’s October National Bureau of Statistics manufacturing purchasing managers’ index (PMI) will be released.

Lee stated, "The FOMC is scheduled for October 30, and an additional rate cut in October is widely anticipated. The focus will be on when the Federal Reserve will end quantitative tightening (QT) and whether there will be another rate cut in December. Due to the US government shutdown (temporary suspension of government work), the market is preparing for the FOMC with only the consumer price index (CPI) available. The market will need to look for clues on further rate cuts and the end of QT in the Fed’s statement and in Chairman Jerome Powell’s interview. At the same time, the market should be mindful of the various possible interpretations of the uncertain economic situation," he added.

Major earnings announcements from both US and Korean companies will continue this week. On October 28, Visa and UnitedHealth will report their results; on October 29, Microsoft, Alphabet, Meta, and Boeing; and on October 30, Amazon, Apple, and Eli Lilly will release their earnings. Among Korean companies, POSCO Holdings and Hanwha Ocean will announce results on October 27; Samsung SDI, Samsung Biologics, and Hana Financial Group on October 28; SK Hynix and Woori Financial Group on October 29; and Samsung Electronics and KB Financial Group will announce their third-quarter results on October 30.