Will Kospi climb higher after Chuseok? Semiconductors, defense, cosmetics in focus

The Kospi broke above the 7,100 level ahead of the Chuseok holiday. Historical data show the index rose in the five trading sessions following Chuseok in 68 percent of the past 22 years.

Securities firms are advising investors to hold their semiconductor positions while also keeping an eye on export-oriented sectors such as defense and cosmetics. A US-China summit set to take place during the holiday and movements in US long-term interest rates and global oil prices are seen as the key variables that will determine whether the rally extends.

An analysis by Daishin Securities covering 22 years of Kospi performance around Chuseok found that the index gained an average of 1.34 percent in the five trading days after the holiday, rising in 68 percent of those years. In years when the market was weak before the holiday, the post-Chuseok gain averaged 1.65 percent, with the index advancing in 73 percent of cases.

Lee Kyung-min, a researcher at Daishin Securities, said the cautious sentiment ahead of Chuseok presents an opportunity to add exposure. He said the market has already priced in much of the shock from interest rate hikes in the United States and Japan. Daishin Securities expects the Kospi to attempt further gains once it firmly establishes itself above the 6,900–7,100 range. With the index having broken through 7,100 during trading just before the holiday, the key question is whether it can hold that level once markets reopen.

Semiconductors remain a sector to watch after the holiday. Exports are rising rapidly amid continued expansion of AI investment. According to Korea Investment & Securities, semiconductor exports from Sept. 1 to Sept. 10 surged 270 percent from the same period a year earlier. Micron's earnings release, scheduled for Sept. 30, is also seen as a major indicator of the sector's momentum.

Kim Dae-jun, a researcher at Korea Investment & Securities, said semiconductor exports are expected to support the sector's upward trend as AI momentum continues, adding that investors should maintain their current semiconductor weighting.

Defense and cosmetics were also highlighted as sectors deserving attention. Both have high overseas sales exposure, meaning a weaker won against the dollar boosts their won-denominated earnings — a positive factor. Analysts expect investor interest to remain focused on sectors that have shown relative strength recently.

Kim said that in an environment where trading volume is expected to thin out, sector rotation is unlikely. "The probability is higher that sectors that have already attracted market interest will continue along the same upward path," he said. He added that short-term trading in export-related sectors that rallied before the holiday remains a viable option.

External variables also warrant attention during the holiday period. The US-China summit, taking place while domestic markets are closed, is a key factor to watch. The outcome of discussions on tariffs and technology areas including advanced semiconductors and AI could shift investor sentiment when trading resumes. Movements in US long-term interest rates and global oil prices are also expected to influence foreign investor flows.

Han Ji-young, a researcher at Kiwoom Securities, said it is reasonable to approach the US-China summit as an event that will not lead to a further deterioration in relations between the two countries. She said the meeting is more meaningful as a check on further escalation than as a sign that tensions will be resolved in earnest.

A series of major economic data releases and corporate earnings reports are due shortly after the holiday. Micron's earnings and the US personal consumption expenditures price index for August are both scheduled for Sept. 30. Domestic September export figures are due Oct. 1, followed by US employment data on Oct. 2.

Han said investors should not interpret a drop in trading volume ahead of the holiday as a shift in the market's overall direction. "It is advisable to avoid reading volatility that may emerge amid a short-term supply-demand vacuum as a genuine change in market price trends," she said.