Among the world’s major stock markets in the third quarter of this year, the slump in the Korean sto..

中 -12% and 日 -5% in the third quarter, but 韓 -18%
US S&P 500 and Nasdaq 100 rise rather than rise

사진 확대 On the 8th, ahead of the holiday, the market conditions such as KOSPI are displayed on the dealing room of Hana Bank’s headquarters in Jung-gu, Seoul. The KOSPI closed at 6625.93, down 177.87 points (2.62%) from the previous day, and the KOSDAQ index also closed at 892.27, down 6.16 points (0.69%). [News 1]

Among the world’s major stock markets in the third quarter of this year, the slump in the Korean stock market was noticeable. On the AI semiconductor rally, the KOSPI surged 60 percent this year, the highest gain in the world along with Taiwan, but saw a sharp sell-off, led by memory chip stocks, as the AI craze subsided in early July. Unlike the U.S. S&P 500 and Nasdaq 100, which continued to rise during the same period, the KOSPI fell by nearly 18%.

According to the Korea Exchange on the 11th, the KOSPI fell from 8303.41 on July 1 to 6838.04 on September 30. Over the course of three months, the rate of decline has reached 17.65%. As of the closing price on the 8th, it closed at 6625.93.

During the same period (July 1 to September 30 this year), China’s CSI300 index fell 12.13% from 4958.98 to 4357.62. Japan’s Nikkei 225 Index fell 4.74% from 77.96 to 66,753.72. On the other hand, the U.S. stock market showed the opposite trend. The S&P 500 rose 2.25% from 7483.23 to 7651.54, and the Nasdaq 100 also rose 2.01% from 29,809.13 to 34,408.50.

Among major countries, the relative weakness of the Korean stock market is remarkable. In particular, the KOSPI fell 25% by the end of September compared to the annual high of 914.55 (based on closing price) recorded on June 22. However, compared to the end of last year, it is still up more than 62%.

In the third quarter, the KOSPI suffered from bad news both at home and abroad. The surge in international oil prices and rising interest rates in major countries due to the prolonged war in the Middle East have had an adverse impact. On top of that, concerns over a “peakout” (falling after the peak) in the semiconductor industry and a surge in U.S. government bond rates have put a damper on global investor sentiment.

The index, which once plunged to 5,262.77 during the day at the end of July, succeeded in rebounding as global semiconductor adjustments ended and authorities regulated single-stock leveraged products of “Samjeon and Nix.”

사진 확대 Samsung Electronics and SK Hynix.[Yonhap News]

The market’s attention is on how much the KOSPI will be able to make up for its fall in the third quarter in the fourth quarter. Experts point to the lack of funds to boost the index’s vitality as the reason for the KOSPI’s recent sluggish performance.

Kim Dae-joon, a researcher at Korea Investment & Securities, said, “The liquidity of the Korean stock market is depleted compared to the first half of the year,” adding, “It will be difficult to expect a steep recovery of large-cap stocks in this situation.” The daily average transaction value of KOSPI, which was 50.3471 trillion won in June, fell 57% to 21.36 trillion won last month.

In particular, foreign investors are exiting Korea. Kim Jae-seung, a researcher at Hyundai Motor Securities, said, “Rather than fundamental factors, individual investors have been in the loss section in the bear market since June, undermining investor sentiment, and net selling by foreign investors is also continuing.”

According to Hyundai Motor Securities, foreign investors net sold 21.6 trillion won on the KOSPI between September and October, net selling 5.2 trillion won and 12 trillion won on the two stocks of Samsung Electronics and SK Hynix, respectively. Samsung Electronics’ foreign ownership ratio is the lowest in 10 years.

“The global stock market is paying attention to the initial public offering (IPO) of artificial intelligence (AI) company Antropic and the U.S. midterm elections in the fourth quarter,” said Kim Jae-seung, a researcher. “In general, the U.S. stock market and the KOSPI have weakened since September ahead of the U.S. midterm elections, but they tend to gradually rebound from mid-October.”

사진 확대 the Yeouido stock market.[Yonhap News]

The biggest prop of the rebound is corporate earnings. The stock market expects major domestic companies’ operating profit to increase by more than 20 percent in the third quarter from the previous quarter. In particular, it is positive that demand for memory semiconductors continues due to increased investment in artificial intelligence (AI).

As investment in AI infrastructure continues, some observers say that Korean companies’ expectations for benefits coexist.

Shim Jong-min, a CSLA researcher, was optimistic about the outlook for the Korean semiconductor industry, saying, “Rising interest rates could put additional burden on market returns.” The move is aimed at continuing the rise in Korean companies’ earnings as investments by U.S. hyperscalers (superscale data center operators) continue.

Samsung Electronics announced on the 8th that its operating profit in the third and fourth quarters was tentatively tallied at 107.4 trillion won, up 782.5% year-on-year. It became the first Korean company to surpass 100 trillion won in quarterly operating profit.

Han Ji-young, a researcher at Kiwoom Securities, said, “As the market’s eye level on semiconductor stocks has risen, the focus is shifting toward profit sustainability after next year rather than performance for the rest of this year,” adding, “There is a limit to making mid-term business decisions until 2028 based on the results.”

The upcoming U.S. midterm elections on November 3 are also variables.

Lee Kyung-soo, a researcher at Hana Securities, said, “As a result of analyzing six cases of mid-term elections since 2000, we recorded positive (+) performance (average +3.6%) by the end of the year from 5.”

“In 2018, the worst case, the S&P 500 plunged 14% by the end of the year in the aftermath of the Republican Party’s crushing loss of 41 House seats due to the highlight of the judgment against then-President Trump, but a strong rebound was seen from the beginning of the following year,” he added.

International oil prices are also considered a variable. If oil prices stabilize, the burden of prices and interest rates will be lowered and foreign supply and demand will improve, which will strengthen the upward momentum of the stock market.

Daishin Securities said in a report on the 6th, “If there is no additional surge in oil prices and interest rates, the direction of the stock market is upward,” adding, “The KOSPI’s leading price-earnings ratio (PER) of less than 6 times has higher potential for upside than downside risks.”