Last week, the domestic stock market jumped sharply on the back of a surge in semiconductor stocks centered on Samsung Electronics and SK hynix. The KOSPI index, which opened at 3,610.60 points on Oct. 13, finished at a record high of 3,748.89 points on Oct. 17. The KOSPI index soared 3.83% during this period. In contrast, KOSDAQ fell 0.11%, remaining flat.
This week (Oct. 20–24), amid uncertainty over the U.S.-China trade dispute, the conclusion of Korea-U.S. tariff talks and expectations for revisions to the Commercial Act and tax laws in the National Assembly are likely to shape investor sentiment. However, in the short-term overheated stock market, profit-taking could emerge as a variable.
Third-quarter big tech earnings also begin. Among the Magnificent 7 (M7) corporations, Tesla will release results first on Oct. 22 (local time).
Tariff talks between our country and the United States have struggled amid differences over investment methods and the conclusion of a currency swap. However, on Oct. 15, U.S. Treasury Secretary Scott Bessent said, "Tariff negotiations with Korea are in the final stages," and on the same day, Deputy Prime Minister Koo Yun-cheol, who visited the United States, said the two countries are "in a phase of rapid coordination," fueling expectations for a deal.
Ahead of the APEC summit opening at the end of this month, the Asia-Pacific Economic Cooperation (APEC) Finance and Structural Reform Ministers' Meeting will be held for four days from Oct. 20 on Yeongjongdo, Incheon. There is speculation that an agreement between the two countries could be reached there. If a trade agreement is reached at a level acceptable to Korea, sectors such as automobiles that were left out of the previous rally could benefit as the burden of item tariffs (25%) eases.
Also boosting the market, the ruling party is pushing a third amendment to the Commercial Act centered on mandatory cancellation of treasury shares, with the goal of passing the National Assembly in November. At the Ministry of Economy and Finance's parliamentary audit held Oct. 13–14, Deputy Prime Minister Koo Yun-cheol hinted at a reconsideration, saying regarding separate taxation of dividend income, "We will discuss from a zero base to find the optimal plan with the National Assembly." Presidential Chief of Staff for Policy Kim Yong-beom also said in an interview that the view of a 25% top rate for separate taxation of dividend income has merit.
Attention should also be paid to U.S. economic indicators to be released on Oct. 24, including the September consumer price index (CPI) and the S&P manufacturing purchasing managers index (PMI). On Oct. 20, China's third-quarter gross domestic product (GDP) will be released.
Kim Yu-mi, a Kiwoom Securities researcher, said, "September CPI is expected to rise slightly month over month, while core inflation is likely to remain at the previous month's level." She added, "Given that recent dovish comments by Federal Reserve (Fed) Commissioners have strengthened expectations for rate cuts, this inflation outcome is unlikely to significantly disrupt the current course of monetary policy."
Recently, concerns about loan delinquencies at U.S. regional banks have dampened investor sentiment in financial markets. On this, Kim analyzed that "because the soundness of large banks is solid, the probability that this risk will spread into a financial system crisis is limited."
The third-quarter earnings season also continues. In the United States, GM (Oct. 21), Tesla and IBM (Oct. 22), and Intel (Oct. 23) will announce results, while in Korea, Hyundai E&C and Samsung Heavy Industries will release third-quarter results on Oct. 22 and 23.
NH Investment & Securities expects the KOSPI index to move in the 3,550–3,850-point range this week. It cited semiconductors, securities, holding companies, artificial intelligence (AI) software, food and beverage, and casinos as sectors of interest.
Kang Jin-hyuk, a Shinhan Investment & Securities researcher, said, "Despite the headwind of U.S.-China tensions, the market is focusing on AI, liquidity, and earnings," adding, "We need to confirm the sustainability of the AI tech rally through AI investment (Capex, capital expenditure for facilities) guidance."