[Market ING] KOSPI Recovers 4,100 Mark: Is a "Santa Rally" Coming?

Weekly KOSPI Expected Range: 3,850?4,200

With the KOSPI recovering the 4,100 mark last week, expectations for a year-end "Santa Rally" are growing. Foreign investors, who sold more than 14 trillion won in the KOSPI market last month and dragged the index down, have shifted to net buying this month, bringing renewed warmth to the market. This week, market fluctuations are expected to be determined by the outcome of the December Federal Open Market Committee (FOMC) meeting in the United States.

Yonhap News Agency

Last week, the KOSPI rose by 4.42%, while the KOSDAQ gained 1.32%. Lee Kyungmin, a researcher at Daishin Securities, commented, "The market sentiment is reversing, supported by the KOSPI holding above the 3,800 level. The short-term liquidity squeeze eased as quantitative tightening (QT) was suspended on December 1, and risk aversion has subsided due to the rebound in the cryptocurrency market and the alleviation of downward pressure on the Korean won."

As foreign selling has abated and the KOSPI has climbed above 4,100, anticipation for a year-end Santa Rally is mounting. Kim Jongmin, a researcher at Samsung Securities, stated, "Global stock markets are maintaining a steady upward trend as they await the December FOMC event, and the KOSPI is also showing a more stable pattern with reduced volatility compared to November. The fact that the index is rising in the absence of any special events is characteristic of a bull market, indicating that buying demand is robust, unlike in a bear market. In other words, the liquidity environment is stabilizing, the growth story for artificial intelligence (AI) continues to expand, and a favorable environment for a Santa Rally is being created."

The market is expected to closely monitor the December FOMC scheduled for this week, as it is a key gateway for the Santa Rally to materialize. Researcher Lee noted, "Stock market movements will be determined by monetary policy expectations before and after the FOMC meeting in the early morning of the 11th. Due to the impact of the government shutdown (temporary work stoppage), the release of November employment and inflation data has been delayed until after the FOMC, and with the ADP November employment index-a substitute indicator for jobs-coming in weak, expectations for a December rate cut have increased." He added, "What needs to be confirmed at the FOMC are the dot plot and the monetary policy path for 2026 and 2027, as indicated by Jerome Powell, Chair of the Federal Reserve."

Na Jeonghwan, a researcher at NH Investment & Securities, said, "There is a growing atmosphere of anticipation for a rate cut in the market, with the probability of a December rate cut reflected at 89.2% according to FedWatch, and the possibility of additional cuts in April and July 2026 is also partially priced in. If the Fed chooses to hold rates steady due to a lack of data, a short-term market correction may be inevitable. However, considering the recent slowdown in inflation and employment indicators, this could be interpreted as merely a postponement of the rate cut timing, so excessive negative interpretations should be limited." NH Investment & Securities projected the KOSPI's expected range for this week to be between 3,850 and 4,200.

There is also an opinion that if volatility increases around the FOMC, it could present a buying opportunity at lower prices. Researcher Lee said, "This week, the KOSPI is expected to fluctuate around the 4,000 mark and resume its upward trend as key events are confirmed. If volatility increases before and after the FOMC, we maintain the strategy that this will be a buying opportunity at lower prices."

This week, the market's attention is also likely to focus on the earnings announcements of Oracle and Broadcom. Researcher Lee explained, "Oracle is scheduled to announce its earnings on the 10th, and Broadcom on the 11th. Both companies have been at the center of discussions regarding the risk of overinvestment by AI firms and the paradigm shift toward tensor processing units (TPUs). In addition to earnings, attention should be paid to each company's business outlook, guidance, and comments on major issues." Kang Jinhyuk, a researcher at Shinhan Investment & Securities, pointed out, "Although the market has moved past extreme fear, as seen in the recent rumors about Microsoft, it remains sensitive to negative news. Ultimately, the earnings announcements from Broadcom and Oracle will be needed to confirm the solid fundamentals of AI."

This week's major scheduled events include China's November export data on the 8th, the US October Job Openings and Labor Turnover Survey (JOLTS) and China's November Consumer Price Index (CPI) on the 10th, and the US December FOMC results on the 11th.