The domestic stock market experienced significant fluctuations due to rising U.S. long-term interest rates. However, a major shareholder return announcement from SK Hynix and expectations for semiconductor earnings helped support the index, partially recovering losses. Next week, NVIDIA's earnings report, the U.S. Jackson Hole meeting, and the Bank of Korea's monetary policy committee are all scheduled, putting the market's judgment on interest rates and the AI investment cycle to the test.
According to the Korea Exchange, on August 21, the KOSPI closed at 6,912.95, up 60.37 points (0.88%) from the previous trading day. After a sharp drop of 5.80% on August 19, the KOSPI rebounded with a 5.89% increase on August 20, quickly recovering some of its losses. For the week of August 18-21, the KOSPI fell 0.93%, while the KOSDAQ dropped 7.25%.
The primary factor affecting the stock market this week was the rise in U.S. long-term interest rates. The yield on 30-year U.S. Treasury bonds exceeded 5.3%, and the 10-year yield rose to around 4.7%, increasing the valuation pressure on growth stocks due to higher discount rates. Factors contributing to the rise in long-term rates included increased fiscal spending by various countries and a surge in corporate bond issuance by big tech companies for AI infrastructure investments. Additionally, ongoing geopolitical uncertainties in the Middle East have dampened investor sentiment towards risk assets.
On August 19, the shock from rising interest rates was directly reflected in the domestic stock market, causing a sharp decline in the KOSPI. However, the turning point came on August 20 with the announcement of shareholder returns. SK Hynix revealed a plan for a 40 trillion won stock buyback and complete cancellation of shares, which quickly improved investor sentiment. Analysts noted that the expanded shareholder returns from Samsung Electronics and SK Hynix have also led to improved foreign investment and a stronger won. In fact, foreign investors maintained a net buying trend this week, contributing to the index's rebound.
Nevertheless, the valuation pressure from rising long-term interest rates remains. Although the U.S. Treasury's expansion of its long-term bond buyback program has somewhat eased rate concerns, structural fiscal deficits, the burden of Treasury supply, and ongoing corporate funding demands for AI investments mean that long-term rates may not stabilize quickly.
Next week, several key events are set to influence the direction of global financial markets. On August 26, Hyundai Motor's 2026 CEO Investor Day and the U.S. July Personal Consumption Expenditures (PCE) price index are scheduled. On August 27, NVIDIA's earnings report and the Bank of Korea's monetary policy committee meeting will take place. The Jackson Hole meeting will also occur from August 27-29. Changes in U.S. July durable goods orders and the Bank of Korea's growth and inflation outlook will be significant variables.
Particularly, NVIDIA's earnings report will be closely watched not only for revenue figures but also for the growth rate of data center revenues, demand for Blackwell, future guidance, and the sustainability of capital expenditures (CAPEX) from clients. As market interest shifts from merely confirming AI demand to assessing how long AI investments can be sustained, guidance is likely to play a crucial role in determining stock price direction.
At Jackson Hole, Federal Reserve Chair Kevin Warsh is scheduled to deliver his first speech. The market is expected to focus on the Fed's views regarding price stability, balance sheet reduction, and the Treasury's long-term bond buyback, rather than specific interest rate paths. The Bank of Korea's monetary policy committee will be a focal point for decisions on interest rates, changes in growth and inflation forecasts reflecting the semiconductor supercycle, and assessments of the declining won-dollar exchange rate.
Analysts suggest that while short-term volatility may continue next week, the recent sharp decline has somewhat alleviated valuation pressures, making it likely that stocks with confirmed earnings will attempt a rebound. However, if U.S. long-term interest rates rise again or NVIDIA's guidance falls short of market expectations, a reassessment of valuations for AI-related stocks may resume, indicating the need for a strategy that responds after confirming key events.
Na Jeong-hwan, a researcher at NH Investment & Securities, stated, "If NVIDIA's earnings confirm the continuation of the AI cycle and volatility in U.S. Treasury rates calms following Jackson Hole, normalization of valuations is expected to continue. If the KOSPI stabilizes around the 7,000-point level, it will be effective to broaden the approach to non-semiconductor sectors as AI monetization is confirmed in earnings."
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.