The KOSPI, which has recovered above the 7,000 mark, is under scrutiny to see if it can maintain its upward trend after the Chuseok holiday. Key events, including U.S. inflation and employment data, Treasury yields, and Micron's earnings report, are set to unfold immediately after the holiday, influencing market sentiment regarding interest rates and the semiconductor sector.
According to the Korea Exchange, the KOSPI closed at 7,080.92 on the last trading day, September 23, up 63.01 points (0.90%) from the previous session. After finishing at 7,007.72 on September 21, the KOSPI has traded above the 7,000 mark for three consecutive days. Market participants are keen to see if this upward momentum continues on the first trading day after Chuseok.
Historically, the KOSPI has risen on the first trading day after Chuseok eight times and fallen twice over the past decade. In the years it rose, the increases were generally around 1%, with a notable 2.74% rise in 2022, the highest in the last ten years. Last year also saw a 1.73% increase, while declines of 0.41% and 2.41% occurred in 2021 and 2023, respectively.
The first variable affecting the market after Chuseok will be the U.S. inflation and employment data. Starting September 29, the Job Openings and Labor Turnover Survey (JOLTS) will be released, followed by the August Personal Consumption Expenditures (PCE) price index and Automatic Data Processing (ADP) private employment figures on September 30, and the September employment report on October 2. The outcomes of these reports could alter the Federal Reserve's future interest rate trajectory, drawing attention to movements in U.S. Treasury yields.
Seo Sang-young, a researcher at Mirae Asset Securities, stated, "The most significant factor affecting the stock market this week is how the U.S. inflation and employment data will influence the Federal Open Market Committee's (FOMC) future interest rate path. If the employment report remains strong, expectations for further tightening by the Fed could lead to additional increases in Treasury yields."
Quarter-end rebalancing may also play a role in market dynamics. With a significant performance gap between stocks and bonds, there is a possibility of asset allocation adjustments by pension funds and insurance companies at the end of the quarter. Since the scale and timing of rebalancing are not predetermined, there could be simultaneous selling of stocks and buying of bonds between September 28 and 30. If the stock market shows weakness despite falling interest rates during this period, it may be necessary to distinguish between fundamentals and quarter-end supply and demand.
Micron's earnings report, scheduled for release after the market closes on September 30, is another key event for the domestic market. Investors will be looking for insights on high-bandwidth memory (HBM4) demand, DRAM and NAND pricing, and guidance for the next quarter's capital expenditures. Lee Kyung-min, a researcher at Daishin Securities, noted, "This event is likely to confirm the lower expectations for the performance of Korean semiconductors." The 'Yotta 2026' event, taking place in Las Vegas from September 28 to 30, is also anticipated to address significant developments in AI infrastructure.
Amid these key variables, some analysts believe the KOSPI has room for further gains. The researcher stated, "The 12-month forward price-to-earnings ratio (PER) is at 5.49, which is historically low, indicating sufficient potential for valuation normalization. A rebound target of around 7,600, corresponding to a forward PER of 6, is plausible."
* This article has been translated by AI.
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