South Korea's KOSPI Breaks 3,650 Barrier, Achieving Record Close in Earnings Season Build-Up

South Korea's KOSPI index reached a historic milestone on October 15, closing above the 3,650 benchmark for the first time ever. The market's rally was fueled by optimism surrounding potential liquidity enhancements from the U.S. Federal Reserve (Fed), which outweighed concerns over lingering U.S.-China trade tensions. Robust buying activity from foreign and institutional investors played a significant role in propelling the index to its record-breaking close.

The Korea Exchange reported that KOSPI closed at 3,657.28, marking an impressive gain of 95.47 points (2.68%) compared to the previous session’s close of 3,561.81. Opening at 3,580.64, the index began the day with an initial rise of 18.83 points (0.53%) and maintained its upward momentum throughout the trading session.

Fed Optimism and Mitigated Trade Concerns Boost Confidence

According to Jae-won Lee, a researcher at Shinhan Investment Corp., the market seemed to have already priced in the impact of new Chinese sanctions, which paved the way for a rebound fueled by bargain hunters. “Additionally, dovish remarks from Fed Chair Jerome Powell about monetary policy lifted market sentiment as we approach earnings season, with expectations of strong corporate fundamentals further boosting the outlook,” he explained.

Powell’s hints at the potential completion of quantitative tightening efforts bolstered hopes for a rate cut, stoking investors’ optimism. “Anticipation of improved liquidity due to the Fed's accommodative policies appears to have ignited the market's upward trajectory,” Lee noted.

The rally was powered by net purchases from foreign investors and institutions, totaling KRW 1.81 trillion (approximately $1.34 billion) and KRW 8.76 trillion ($6.48 billion), respectively. In contrast, retail investors net sold shares worth KRW 1.13 trillion ($835 million), opting to lock in profits during the surge.

Market Leaders Shine as Earnings Season Approaches

Several KOSPI heavyweights posted stellar performances ahead of the anticipated earnings season. Samsung Biologics led the charge, surging 9.74%, followed by Doosan Enerbility (9.37%), KB Financial (4.33%), and tech giant Samsung Electronics (3.71%), all of which contributed to the index’s record-breaking performance.

The KOSDAQ, South Korea's tech-focused index, also saw notable growth. It ended the day 16.76 points higher (1.98%) at 864.72, after opening at 853.17 with a 5.21-point bump (0.61%).

Retail investors dominated the KOSDAQ, amassing KRW 2.76 trillion ($2.04 billion) worth of shares. On the other hand, foreign investors and institutions offloaded stocks valued at KRW 1.51 trillion ($1.12 billion) and KRW 1.2 trillion ($890 million), respectively.

Performance within the KOSDAQ's leading stocks presented a mixed picture. Key gainers included Rainbow Robotics (up 3.41%), Pharmaresearch (2.81%), and EcoproBM (1.21%). However, losses were registered by Samchundang Pharm (-1.04%), Alteogen (-0.22%), and Peptron (-0.37%).

Korean Won Strengthens as Markets Rally

The South Korean won also posted gains against the U.S. dollar, with the KRW/USD exchange rate settling at 1,421.3 won per dollar—an improvement of 9.7 won from the prior session’s close of 1,431.0 won. The currency's strength reflects heightened market confidence, attributed to positive monetary policy expectations and robust market activity.

As the market heads into earnings season, investor focus will sharpen on corporate fundamentals, which are expected to play a pivotal role in dictating the market's direction in the coming weeks. Insight into sector-specific strength and earnings performance will determine whether the current bullish sentiment can be sustained.

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