[Market ING] KOSPI Surges Above 2440, Sustained Rally Depends on Foreign Investors

The KOSPI, which ended 2024 below the 2400 level, rose sharply to the 2440 level on the 3rd, drawing attention to whether the rebound can continue this week (January 6-10).

Last week, the KOSPI rose 1.54%, and the KOSDAQ increased by 5.97%. Jinhyuk Kang, a researcher at Shinhan Investment Corp., analyzed, "On the 3rd, foreign demand strongly entered mainly through futures, causing both markets to rebound significantly. It is the first time in a month since December 3 last year that foreigners have net purchased more than 1 trillion won in KOSPI spot and futures. Although the won-dollar exchange rate remains at a burdensome level of 1468.4 won, the panic seems to be subsiding."

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On the 3rd, foreigners net purchased 284.2 billion won in the KOSPI market, 143 billion won in the KOSDAQ market, and bought 893.8 billion won in futures.

If foreign buying momentum revives, the rebound is expected to continue. Joonki Cho, a researcher at SK Securities, said, "If foreigners switch to buying as they did on the 3rd, there are very limited entities to suppress it by selling, so the price reaction can be explosive. Last year, the foreign ownership peak was 35% in early July, but it has dropped to the low 31% range currently. Even recovering to the average level around 33% would fill the void in foreign demand and create considerable upside."

However, Samsung Electronics' earnings report to be announced on the 8th is expected to negatively affect the continuation of foreign buying. Junghwan Na, a researcher at NH Investment & Securities, said, "Samsung Electronics' preliminary Q4 earnings for last year will be released on the 8th. The consensus estimates for Q4 operating profit and net profit are 8.9 trillion won and 8.1 trillion won, respectively, but the actual preliminary results may fall short of consensus. Also, after the preliminary earnings announcement, the earnings outlook for KOSPI companies in 2025 may be revised downward, so foreign investor inflows into the Korean stock market are expected to be limited for the time being." NH Investment & Securities projected the KOSPI range this week to be between 2350 and 2480.

Key schedules this week include the U.S. November 2023 Job Openings and Labor Turnover Survey (JOLTs) and December Institute for Supply Management (ISM) Services Index on the 7th. On the 8th, the U.S. Federal Open Market Committee (FOMC) December meeting minutes will be released, and on the 10th, China's December Consumer Price Index (CPI), Producer Price Index (PPI), and the U.S. December employment report will be announced. Additionally, CES 2025, the world's largest electronics and IT exhibition, will be held from the 7th to the 10th.

Kyungmin Lee, a researcher at Daishin Securities, said, "By reviewing the FOMC minutes, anxiety about delayed rate cuts is expected to ease. Contrary to the hawkish tone of Fed Chair Jerome Powell's press conference and the Summary of Economic Projections (SEP), the December FOMC statement was almost identical to the November FOMC statement except for one sentence. Therefore, during the review of the minutes, we expect a phase of reduced monetary policy uncertainty and normalization of consensus on rate cuts."

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