The Korea Composite Stock Price Index (KOSPI) increased by 3.31% to 5,738.18 during Friday trading. This recovery follows a 7.57% decline on Thursday. Despite the rebound, the index remains approximately 37% below its June peak of 9,114.55. Market performance is currently influenced by US producer price data, which reached a 4.5-year high, fueling concerns over potential Federal Reserve interest rate hikes.
Sector performance shows a rotation away from AI-related stocks. Hanwha Aerospace shares rose 8.25%, and Samsung C&T gained 5.79%. In contrast, major chipmakers saw more modest growth, with Samsung Electronics up 2.14% and SK Hynix up 1.82%. Data from the Korea Exchange indicates that non-AI heavyweights are currently leading the market gains.
The KOSPI is trading at approximately eight times earnings, a valuation level comparable to the 2020 pandemic, the 2008 financial crisis, and the 2003 credit card debt crisis. Analysts at KB Securities suggest the possibility of a W-shaped recovery, though they warn that selling pressure may persist as retail and foreign investors exit the market and major buyback programs conclude.
South Korea's market experienced an 18.8% decline in October through Thursday, significantly outpacing losses in Japan and Taiwan. Analysts are monitoring the cash generation of large technology firms as a key indicator for future market stability. Meanwhile, credit default swap premiums for major tech companies like Google, Microsoft, and Meta are currently on the rise.
