[Market View] KOSPI, which had stumbled, continues volatility or attempts to rebound?

(Seoul = Yonhap News) Reporter Kim Yu-ah = Attention is being paid to whether KOSPI, which is continuing its slumping market with a plunge of 7% the previous day, will show additional volatility on the 16th and whether it will be able to rebound with counter-buying thanks to the rise in the New York stock market last night.

KOSPI closed at 5,554.22, down 454.59 points (7.57%) from the previous day. It was the lowest level since April 7 (5,494.78 points), and the index's decline and rate were also the largest since July 28 (732.09 points, -10.84%).

KOSPI, which fell for 7 consecutive trading days from the 6th to this day, plummeted a total of 1,449.52 points (21%) during this period. It has been two years since September 3-11, 2024, that the market fell for 7 consecutive trading days.

The KOSDAQ index closed at 760.82, down 63.06 points (7.65%).

In the KOSPI and KOSDAQ markets, selling sidecars were activated from the beginning of the market, and circuit breakers were activated in both markets in succession. This is also the first time since July 29th.

In the stock market as of the close of regular trading, foreign investors had a selling advantage of KRW 3.634 trillion and were net sellers for 8 consecutive trading days, while individuals and institutions had a buying advantage of KRW 1.2886 trillion and KRW 1.6906 trillion, respectively.

Including the aftermarket, foreigners net sold 3.7582 trillion won, individuals net bought 1.3948 trillion won, and institutions net bought 1.712 trillion won.

Growing doubts about the profitability of AI infrastructure investments and concerns that the financial cost burden of companies competing in a high interest rate environment may also increase led to the index falling. Also, the fact that the US consumer price index (CPI) in September slightly exceeded market expectations was also bad news.

However, the market is paying attention to the fact that figures that alleviate the burden of interest rate hikes were announced last night to some extent.

The US producer price index (PPI) in September rose 1.3% from the previous month, exceeding market expectations, but retail sales growth was only a meager 0.2% excluding the impact of gas station sales, confirming a slowdown in consumption at the same time.

This is likely to be evaluated as a factor alleviating concerns about interest rate hikes. According to FedWatch of the Chicago Mercantile Exchange (CME), the interest rate futures market reflected the possibility of a base interest rate increase by the U.S. Federal Reserve this month at about 27%.

U.S. Treasury yields also fell significantly, especially on long-term bonds. The yield on 10-year U.S. Treasury bonds fell by 12bp (1bp = 0.01% point), and the yield on 30-year bonds fell by more than 11bp, reaching 5.05% and 5.40%, respectively.

International oil prices were mixed. On the New York Mercantile Exchange, West Texas Intermediate (WTI) crude oil for November delivery rose 3.03%, but December Brent crude oil, the global benchmark, fell 0.13%.

News that the U.S. government is considering easing sanctions on the so-called 'shadow fleet', which has been used to evade international sanctions, put downward pressure on oil prices.

The three major New York stock indexes closed higher. The Dow Jones Industrial Average rose 1.08% compared to the previous day, and the Standard & Poor's (S&P) 500 Index and Nasdaq Composite Index rose 0.33% and 0.08%, respectively.

However, many stocks related to AI and semiconductors fell. Micron (+1.87%), SK Hynix [000660] American Depository Receipt (-0.99%), and SanDisk (-0.61%) fell sharply at the beginning of the session, but ended with the decline narrowed, while Nvidia (-1.84%), AMD (-1.50%), Broadcom (-0.55%), and Intel (-2.80%) also fell for the time being.

CoreWeave, a neo-cloud company that sparked concerns about AI infrastructure investment, fell nearly 10% at one point but closed up 5.9%. This had a significant impact when NVIDIA CEO Jensen Huang commented at the Bloomberg event that “CoreWeave’s competitiveness is strengthening every day.”

On this day, the Philadelphia Semiconductor Index fell 0.88%.

Kim Rok-ho, a researcher at Hana Securities, said, “It is believed that Micron has experienced an influx of low-price buying after a recent large correction,” and pointed out, “Although the three major New York stock indexes have risen, the Philadelphia Semiconductor Index has been falling for seven consecutive trading days.”

Morgan Stanley Capital International (MSCI) Korea Stock Market Exchange Traded Fund (ETF) fell 2.26%, and MSCI Emerging Index ETF also fell 0.67%. However, the Russell 2000 index and Dow transportation index rose 1.38% and 1.40%, respectively.

KOSPI 200 overnight futures rose 3.9%.

Experts predict that the KOSPI may turn upward on this day, thanks to the rise in the New York stock market last night and expectations of a supply and demand reversal in response to the KOSPI plunge the previous day.

Seo Sang-young, managing director of Mirae Asset Securities, predicted, "Considering that the U.S. stock market narrowed its intraday decline and KOSPI night futures also surged, (KOSPI) is expected to have a strong start on this day due to the influx of counter-buying."

He continued, “In particular, credit risks in the U.S. are still concentrated in some AI infrastructure companies, and Taiwan’s TSMC’s record-high performance and solid AI demand outlook are positive in that they show that the semiconductor industry itself has not been damaged,” and added, “The decline in Coreweave’s put/call trading volume ratio suggests that the excessive supply and demand response to declines is partially easing.”

Han Ji-young, a researcher at Kiwoom Securities, said, "The investment sentiment of domestic market participants has cooled significantly due to the series of plunges, but in the short term, the possibility of a technical rebound must be opened. Considering the plunge for 7 consecutive trading days, this is a section where the expected value of technical retracement has greatly increased."

However, he added, "We must also prepare for a scenario in which we experience additional declines due to supply and demand and psychological factors such as credit leverage liquidation and surrender selling," and added, "There is a need to set the KOSPI 5,100 level as the index low point."