[Market ING] KOSPI Falls Below 4,000, Expected to Pause for Now

Weekly KOSPI Forecast Band Set at 3,900-4,200

The KOSPI fell below the 4,000 mark last week. After surging past 4,000 and rapidly advancing toward 4,200, the KOSPI has entered a short-term correction due to accumulated price pressures and profit-taking.

Yonhap News

Last week, the KOSPI dropped by 3.74% and the KOSDAQ by 2.62%. The KOSPI turned downward for the first time in six weeks. Lim Jeongeun, a researcher at KB Securities, said, "With the cooling of the U.S. job market and ongoing concerns about an artificial intelligence (AI) bubble sparked by OpenAI, the domestic stock market faced renewed profit-taking pressure on November 7, causing the KOSPI to close below 4,000 for the first time in ten trading days."

Lee Kyungmin, a researcher at Daishin Securities, commented, "The domestic stock market is currently undergoing a short-term correction. At the end of October, the KOSPI formed a short-term peak as optimism about the Asia-Pacific Economic Cooperation (APEC) summit, the U.S.-China and Korea-U.S. summits, the end of the U.S. Federal Reserve's quantitative tightening (QT), and AI expectations were all priced in at once, resulting in an overheated market. However, as we entered a lull in major events in November, profit-taking pressure intensified." He added, "Despite concerns about an AI bubble and valuation, the medium- to long-term upward trend remains intact, and there is no damage to fundamentals."

Foreign investors' selling dragged down the index. Last week, foreign investors sold 7.2803 trillion won in the main stock market. However, individual investors, who absorbed this selling, are expected to provide support for the lower end. Individuals made a net purchase of 7.4598 trillion won last week. Kang Jinhyuk, a researcher at Shinhan Investment Corp., said, "With deposits reaching an all-time high, individuals' interest in the stock market is increasing. While foreign selling may continue as the market awaits positive catalysts such as the AI value chain earnings announcements or the end of the U.S. government shutdown, individual investors are likely to support the market from below."

There are expectations that the process of absorbing supply will likely continue this week. Lee noted, "This week, with relatively little upward momentum or optimism, the process of absorbing supply is likely to persist. The market will fluctuate depending on risk appetite and profit-taking."

Na Jeonghwan, a researcher at NH Investment & Securities, said, "Key risk factors such as the AI bubble debate, weakened expectations for interest rate cuts, and tariff reviews are unlikely to be fully resolved, but the earnings momentum of this year's leading stocks remains valid. It is necessary to use the recent price correction as an opportunity to increase exposure to leading stocks or to assess the short-term upside potential of previously neglected sectors." NH Investment & Securities forecasted the KOSPI's expected band for this week to be between 3,900 and 4,200.

Key events scheduled for this week include Korea's export data for November (1st-10th) on the 11th, the U.S. Consumer Price Index (CPI) for October on the 13th, and U.S. retail sales, as well as China's retail sales, industrial production, and fixed asset investment for October on the 14th.

Major earnings announcements from U.S. and domestic companies are also lined up. On the 10th, CoreWeave will release its results; on the 11th, Navious; on the 12th, Cisco; and on the 13th, Walt Disney and Applied Materials. Korean companies reporting third-quarter results include HYBE and LG Household & Health Care on the 10th; CJ CheilJedang, NCSoft, Nexon Games, and PharmaResearch on the 11th; JYP Entertainment, Pearl Abyss, and Lotte Chemical on the 12th; and LG, Samsung Life Insurance, and Hanwha General Insurance on the 13th.

Lee also pointed out, "On the 11th, China's shopping event 'Singles' Day' is scheduled, so momentum could flow in depending on the exposure and sales rankings of Korean brands. In the latter half of this week's earnings season, with results from companies like HYBE and NCSoft, issues related to China, K-content, and consumer goods companies could attract attention. Earnings from insurance companies such as Samsung Life Insurance are also worth noting."