Next week, the domestic stock market is expected to experience volatility as it digests hawkish signals from the Federal Open Market Committee (FOMC) and concerns related to artificial intelligence (AI). External factors such as international oil prices, U.S. long-term interest rates, and the upcoming U.S.-China summit will also play a significant role. While the supply gap ahead of the Chuseok holiday poses a challenge, analysts suggest that the historically low valuation levels could present a buying opportunity during short-term corrections.
According to the Korea Exchange, the KOSPI closed at 6,894.23 on the previous trading day, up 178.82 points (2.66%) from the prior session. The index opened at 6,885.70, rising by 170.29 points (2.54%) and maintained a gain of over 2% during the day. In the securities market, foreign and institutional investors made net purchases of 970.1 billion won and 1.7173 trillion won, respectively, while individual investors sold a net 4.3652 trillion won.
Next week, macroeconomic variables are expected to influence the stock market direction. Lee Kyung-min, a researcher at Daishin Securities, stated, "The domestic market is still reacting to macro variables. It will fluctuate between stress from the hawkish stance following the September FOMC and easing policy uncertainties."
However, some analysts believe that the likelihood of the FOMC's interest rate hike leading to a continuous tightening cycle, as seen in the past, is limited. Na Jeong-hwan, a researcher at NH Investment & Securities, noted, "The September FOMC's rate hike is unlikely to be viewed as part of a continuous tightening cycle, unlike in 2022 when inflation pressures were widespread. This hike itself is a factor in suppressing expected inflation."
The trend in international oil prices is also a key variable. Concerns over supply disruptions have increased due to the shutdown of Saudi Arabia's oil pipeline, but some supply gaps may be mitigated by increased shipments from the Sohar port in Oman and other major ports. Na also highlighted that easing geopolitical tensions between the U.S. and Iran, along with China's dialogue with Iran, could positively impact oil price stability.
Additionally, the supply gap ahead of the Chuseok holiday could heighten short-term volatility. Na stated, "The combination of the hawkish FOMC's impact and the supply gap before the holiday may lead to short-term market weakness, making a buying strategy aimed at a rebound after the holiday effective." Over the past decade, the average KOSPI return in the five trading days before and after Chuseok has been -0.42% and +0.68%, respectively.
The upcoming U.S.-China summit is also a variable to watch. A working-level meeting is scheduled for September 20, followed by a summit on September 24, with AI, trade, and rare earths among the key topics. In the domestic semiconductor sector, attention should be paid to discussions related to AI and semiconductor regulations concerning China.
Amid these developments, valuation remains a supporting factor for a potential rebound in the domestic stock market. Na noted, "The KOSPI's 12-month forward price-to-earnings ratio (PER) is at 5.5 times, the lowest level on record. The consensus for KOSPI net profit based on controlling shareholders is projected at 806.3 trillion won this year and 1,047.5 trillion won next year, indicating an upward trend in earnings forecasts."
He added, "It is not the earnings themselves but doubts about the earnings that are weighing on stock prices. As the earnings of AI companies, such as Micron, are confirmed, these doubts are expected to gradually dissipate," suggesting a KOSPI forecast range of 6,400 to 7,500.
* This article has been translated by AI.
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