[Good Morning Market] Was the Decline Excessive?... "Bargain Hunting Expected in Korean Stock Market"

On November 6, the domestic stock market is expected to see bargain hunting, particularly in leading stocks that had previously experienced significant declines, buoyed by the rebound of U.S. technology stocks overnight.

Previously, on November 5 (local time), the New York stock market closed higher across the board as buying interest returned to stocks that had seen large corrections the previous day, despite the longest-ever U.S. federal government shutdown. The blue-chip Dow Jones Industrial Average rose by 225.76 points (0.48%) to 47,311, the large-cap S&P 500 Index gained 24.74 points (0.37%) to 6,796.29, and the tech-heavy Nasdaq Index jumped 151.16 points (0.65%) to close at 23,499.80.

UPI Yonhap News

As the U.S. federal government shutdown drags on, the release of economic indicators is being delayed, and growing uncertainty over a Federal Reserve rate cut in December is dampening investor sentiment. However, the perception that technology and semiconductor stocks-especially those at the center of the AI bubble controversy-have declined excessively is spreading, which is expected to have a positive impact on domestic semiconductor stocks as well.

Lee Sunghoon, a researcher at Kiwoom Securities, stated, "Today, the domestic stock market is expected to open higher as the U.S. market rebounded, led by AI technology stocks, and bargain-hunting capital flows in due to the perception of excessive declines from the previous day. In particular, the sharp rebounds of major U.S. semiconductor stocks such as Micron (up 8.9%) and AMD (up 2.5%) are likely to improve investor sentiment toward domestic semiconductor stocks."

Although foreign investors turned to heavy selling the previous day, triggering a sell-sidecar on the KOSPI, the market subsequently pared back some of its losses. Experts agree that this indicates bargain-hunting incentives remain in the market.

Lee added, "Given that the KOSPI surged about 20% in October alone, we should allow for the possibility of a short-term phase of digesting supply. However, the combination of the profit cycle and government policy remains valid, so the medium-term upward trajectory is likely to continue."

Na Jeonghwan, a researcher at NH Investment & Securities, commented, "The KOSPI may undergo a period of adjustment going forward, but technically, it is expected to find support in the 3,700 range. Considering that expectations for improved corporate earnings remain high and that the government's amendment to the Commercial Act is likely to be finalized in the National Assembly in November, the upward trend in the domestic stock market is expected to continue in the medium term."