Kospi eyes rebound after holiday slump as Wall St. gains offer support

Expectations are growing that the Kospi will rebound Monday — its first trading session after the Hangul Day holiday break — driven by bargain hunting following last week's sharp sell-off. The optimism is underpinned by a broad rally across Wall Street's three major indexes on Friday, as well as the clearing of temporary supply-demand pressures tied to options expiry and ETF rebalancing.

However, rising crude oil prices stemming from a deteriorating situation in the Middle East and movements in US Treasury yields remain factors that could limit any recovery.

The Kospi closed Thursday at 6,625.93, down 177.97 points, or 2.62 percent, from the previous session. During regular trading hours, foreign investors and institutions posted net selling of 1.99 trillion won ($1.49 billion) and 1.67 trillion won, respectively. Retail investors absorbed 2.91 trillion won in net purchases but were unable to prevent the index from falling.

Including after-market transactions, net selling by foreign investors and institutions came to 2.08 trillion won and 1.67 trillion won, respectively. Retail investors recorded net purchases of 3 trillion won, while other corporate entities bought 754.4 billion won.

Samsung Electronics posted a preliminary consolidated operating profit of 107.4 trillion won for the third quarter — surpassing 100 trillion won on a quarterly basis for the first time in history — yet the broader market still declined. Analysts attributed the drop to dampened investor sentiment from rising crude prices and US Treasury yields, compounded by options expiry, ETF rebalancing and pre-holiday selling pressure.

Wall Street rebounded on Friday (local time). The Dow Jones Industrial Average rose 0.83 percent from the previous session, while the S&P 500 and NASDAQ gained 0.59 percent and 0.64 percent, respectively. Large-cap technology stocks led the advance, with Microsoft up 2.38 percent and Amazon up 3.29 percent.

Semiconductor stocks, however, weakened. Concerns grew that rising memory chip prices would dampen demand for PCs and smartphones, sending Micron down 0.66 percent, SanDisk down 1.72 percent and SK hynix's American depositary receipts down 0.86 percent. The Philadelphia Semiconductor Index also fell 0.41 percent.

Kim Rok-ho, a researcher at Hana Securities, said profit-taking emerged as wariness persisted over the costs of AI infrastructure investment and its monetization. He added that remarks by the CEO of Lumentum — who said optical component production capacity for AI data centers was effectively sold out through 2029 — served to reaffirm strong demand across the related industry.

The Middle East situation remains a source of market anxiety. Houthi rebels from Yemen launched a missile attack on Saudi Arabia, causing casualties and stoking fears of disruptions to oil supply. The United States said it would not strike Iran before next month's midterm elections, but military tensions in the region remain elevated.

On the New York Mercantile Exchange, West Texas Intermediate crude futures for November delivery settled at $91.85 per barrel, up 0.39 percent from the previous session. Brent crude futures for December delivery rose 0.42 percent to $104.72 per barrel.

The MSCI Korea ETF, which is closely correlated with the domestic market, gained 0.54 percent, and the MSCI Emerging Markets ETF rose 1.06 percent. By contrast, KOSPI 200 overnight futures fell 1.84 percent on Thursday.

Seo Sang-young, a managing director at Mirae Asset Securities, said expectations for a rise in US equities and stabilization in crude prices and Treasury yields are helping ease uncertainty, adding that bargain buying is likely to flow into the domestic market as well.

He also said the one-off supply-demand burden related to options expiry had been resolved, which he viewed as a positive. At the same time, he cautioned that given the upcoming release of the US consumer price index and the start of the earnings season in earnest, the market is more likely to see a rebound from oversold levels and stock-by-stock differentiation rather than a sustained upward trend.

Kiwoom Securities projected a Kospi range of 6,450 to 7,000 for this week. Key variables include the US September CPI and producer price index, earnings from US financial firms and global chipmakers, and movements in the US 10-year Treasury yield, which has been hovering in the 5.2 to 5.3 percent range. That level is expected to keep markets highly sensitive to inflation data. The market anticipates that US consumer price inflation for September will come in at 3.6 percent year-on-year, up from 3.4 percent in August.

In the domestic market, attention is turning to potential revisions in the 2027 earnings forecasts for Samsung Electronics and SK hynix. According to Kiwoom Securities, the market consensus for Samsung Electronics' 2027 operating profit was raised from 546 trillion won on Oct. 2 to 555 trillion won on Thursday, an increase of 9 trillion won. Over the same period, the forecast for SK hynix was lifted from 400 trillion won to 401 trillion won. The overall 2027 operating profit estimate for the Kospi was also revised upward, from 1,327 trillion won to the 1,336 trillion won range.

Han Ji-young, a researcher at Kiwoom Securities, said this week marks a critical juncture for gauging how much the 2027 earnings estimates for Samsung Electronics and SK hynix can be raised, and how strongly those revisions will lift profit forecasts for the Kospi overall. She said such upward revisions would provide downside support for the market.