KOSPI Tops 3,500 for the First Time Amid Rate Cut Speculation

The KOSPI index, a key benchmark for South Korean stocks, soared past the critical 3,500-point threshold during trading, underpinned by mounting expectations for Federal Reserve interest rate cuts. Despite lingering concerns over a potential U.S. government shutdown, underwhelming employment data spurred optimism about monetary policy easing, fueling bullish sentiment in both domestic and global markets.

By 9:25 a.m. Korea Standard Time, the Korea Exchange reported the KOSPI trading at 3,521.06, up 65.23 points (1.89%) from the prior close. The session began on a strong note at 3,525.48, a significant leap of 69.65 points (2.02%) from its previous day’s close at 3,455.83. Notably, the index remained firmly above the 3,500 mark, signaling robust market momentum.

Wall Street Rebounds Despite U.S. Shutdown Worries

Major U.S. indices ended higher overnight as the market downplayed the potential economic damage of a looming federal government shutdown. Weak private sector employment data provided an unexpected catalyst, raising the likelihood of an accommodative stance from the Federal Reserve.

According to ADP, the U.S. private sector shed 32,000 jobs in September, amplifying concerns about a cooling labor market. This deterioration has shifted investor expectations, with many now forecasting two rate cuts by the Federal Reserve in the near future to support economic growth.

AI and Semiconductor Stocks Propel Gains

The surge in equity markets persists on the back of strong performance from artificial intelligence (AI) and semiconductor stocks, which continue to dominate as standout sectors globally. Han Ji-young, a researcher at Kiwoom Securities, remarked, “The U.S. stock market has reached record territory, with the S&P 500 achieving new highs and the Nasdaq and Dow Jones attempting to reclaim previous peaks. AI-related stocks remain at the forefront of this rally.”

Micron Technology, a leader in semiconductors, saw its shares skyrocket by 8%, driven by optimistic forecasts for an AI-induced supercycle in memory chip demand. This wave of positive sentiment extended to South Korea, where September’s semiconductor exports posted solid growth, buoyed by robust global demand.

Foreign investors capitalized on the bullish momentum in South Korea’s stock market, buying shares worth 439.2 billion won. In contrast, domestic retail and institutional investors sold shares valued at 384.6 billion won and 42.4 billion won, respectively.

While most sectors saw gains, construction (-0.39%) and entertainment/culture (-0.29%) were exceptions. Industries leading the charge included manufacturing (2.52%), retail (2.46%), and precision medical devices (1.63%).

SK Hynix Hits Historic High, Tech Dominates

Semiconductor giant SK Hynix reached an all-time high, surging 10% to 395,000 won per share, while Samsung Electronics gained 4.84%, passing 90,000 won during intraday trading. Auto stocks also performed well, with Hyundai Motor rising 0.93% and Kia Motors climbing 1.59%. Conversely, Hanwha Aerospace declined 1.55%, and HD Hyundai Heavy Industries lost 2.08%.

One market analyst noted, “South Korea’s stock market is heavily driven by forward-looking expectations rather than present conditions. While tech and AI sectors are driving the market now, future opportunities may lie in sectors like biotech and automobiles, which are showing steady export performance but haven’t yet fully rallied.”

KOSDAQ Gains as Retail Investors Take Charge

The KOSDAQ index followed suit, showing positive momentum during the session. As of the same time, the index was up 3.68 points (0.44%) at 849.02. It had opened at 853.40, up 8.06 points (0.95%) from the previous session’s close of 845.34, before retracing slightly.

Retail investors showed optimism, purchasing 30 billion won worth of stocks, while foreign and institutional investors offloaded shares worth 3.2 billion won and 17 billion won, respectively.

Sector-wise, construction (0.93%), manufacturing (0.66%), and general services (0.32%) posted gains. However, food and beverages (-0.61%), textiles and apparel (-0.19%), and pharmaceuticals (-0.01%) underperformed.

Among the top-performing KOSDAQ stocks, EcoPro BM rose 2.40%, Peptron gained 1.51%, and Samchundang Pharm climbed 1.66%. On the downside, Rainbow Robotics dropped 1.46%, with PharmaResearch losing 1.41%.

Foreign Exchange Market Sees a Softer Won

In the currency exchange market, the Korean won softened against the U.S. dollar, opening at 1,402.0 won per dollar—down 1.2 won from its previous close of 1,403.2.

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