KOSPI Defies Rising Interest Rates, Only Global Index to Rise

 
Despite fears of soaring interest rates, the KOSPI managed to maintain its upward momentum. As U.S. Treasury yields surged, stock markets around the world experienced declines, but the KOSPI was the only index to rise, buoyed by strong earnings expectations for Samsung Electronics and SK Hynix.
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According to the Korea Exchange, the KOSPI closed at 7,516.04, up 22.86 points (0.31%) from the previous trading day. Initially, the index plummeted more than 4%, dropping to 7,142.71. However, as the afternoon progressed, buying interest in semiconductor stocks helped reverse the trend. Notably, major semiconductor companies like Samsung Electronics and SK Hynix supported the market, with Samsung rising 3.88% and SK Hynix increasing 1.15%.
 
In contrast, stock markets worldwide fell due to the spike in U.S. Treasury yields. On May 15, the Dow Jones Industrial Average dropped 1.07%, the S&P 500 fell 1.24%, and the Nasdaq Composite declined by 1.54%. Asian and European markets also continued their downward trend. As of 3:30 PM, Japan's Nikkei 225 was down 0.97%, Hong Kong's Hang Seng Index fell 1.56%, and Taiwan's TAIEX decreased by 0.68%. The Shanghai B-Share Index dropped 2.56%, while the Shenzhen B-Share Index fell 1.10%. The Shanghai Composite and Shenzhen Composite indices also declined by 0.46% and 0.35%, respectively. Essentially, the KOSPI was the only major index showing an upward trend.
 
Market analysts predict that the surge in bond yields will lead to significant volatility in the stock market for the foreseeable future. Concerns over the prolonged conflict in the Middle East and rising international oil prices have reignited inflation fears, pushing the yield on 10-year U.S. Treasury bonds above 4.5% and the 30-year bonds over 5%. Worries about the Federal Reserve's prolonged tightening measures have also resurfaced. Bond yields in major European countries such as the UK, Germany, and France, as well as in Japan and Taiwan, are also on the rise.
 
The increase in interest rates is also raising borrowing costs for companies and putting pressure on growth stock valuations, triggering a sell-off in tech stocks. Reuters reported that the 12-month forward price-to-earnings ratio (P/E) for the S&P 500 is significantly above its long-term average, with rising rates exacerbating concerns about overvaluation. Lee Kyung-min, an analyst at Daishin Securities, stated, "The yield on 10-year U.S. Treasury bonds has risen to the 4.6% level, continuously dampening risk appetite. However, the inflow of bargain hunting in the semiconductor sector has led to a strong performance for the KOSPI."