[Market ING] KOSPI Nears 3,400, Eyes on FOMC

The KOSPI continues to break record highs day after day, now approaching the 3,400-point mark. With the KOSPI maintaining an upward trend for nine consecutive sessions, market attention is expected to focus on the upcoming September Federal Open Market Committee (FOMC) meeting in the United States, scheduled for the 18th.

Yonhap News Agency

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Last week, the KOSPI rose by 5.94%, while the KOSDAQ climbed by 4.40%. On the 10th, the KOSPI surpassed the 3,300-point level for the first time in four years and two months, setting a new all-time high. The upward momentum continued on the 11th and 12th, with the index breaking record highs on consecutive days. Lee Kyungmin, a researcher at Daishin Securities, commented, "The KOSPI has broken out of the box range (3,100 to 3,250 points) that persisted for over two months, continuing its historic rally. This is the result of heightened expectations for a U.S. interest rate cut due to the employment shock, as well as domestic factors such as semiconductor momentum, tax reform, and expectations for amendments to the Commercial Act."

Foreign investors and institutions are leading the KOSPI's record-breaking rally. Last week, foreign investors made net purchases of 4.0201 trillion won in the main stock market. Institutions also contributed by buying 2.6975 trillion won. Kang Jinhyuk, a researcher at Shinhan Investment Corp., analyzed, "Even after reaching record highs, the KOSPI continues its rally, with both foreign investors and institutions making net purchases for five consecutive days and driving the upward trend. The foreign ownership ratio stands at 32.2%, close to the post-2020 average of 32.4%."

There are opinions that the September FOMC meeting in the United States, scheduled for this week, could become a turning point for the stock market. Researcher Lee stated, "Attention is focused on whether the Federal Reserve's dot plot at the September FOMC, which will be held early morning on the 18th, will meet the market's expectations for rate cuts (more than three times within the year and more than six times by 2026). This could serve as a short-term inflection point."

Lee Sangjun, a researcher at NH Investment & Securities, said, "At the FOMC to be released early morning on the 18th, the Fed is expected to implement a 25bp (1bp=0.01 percentage point) rate cut, thereby resuming the rate cut cycle. Of course, there are concerns about upward inflationary pressure due to tariffs imposed by the Trump administration. However, considering the modest increase of only 22,000 in U.S. nonfarm payrolls in August and the large-scale downward revision of employment figures for the period from April 2024 to March 2025, the Fed is likely to focus on the slowdown in employment. The resumption of rate cuts, increased liquidity, and a weaker dollar are all positive factors for stock prices, especially benefiting new growth sectors such as artificial intelligence (AI) software and pharmaceuticals/biotechnology." He added, "If the government's policy credibility is reaffirmed and policy momentum recovers, and if the Fed resumes its rate cut cycle at the September FOMC, the KOSPI is likely to end the year at a higher level than now." NH Investment & Securities has set this week's expected KOSPI range at 3,200 to 3,450 points.

This week's key events include China's August retail sales, industrial production, and fixed asset investment on the 15th. On the 16th, the United States will release its August retail sales and industrial production data. The U.S. September FOMC will take place on the 18th, followed by the Bank of Japan's (BOJ) September monetary policy meeting on the 19th.

Researcher Kang noted, "One of the reasons for the September bearish outlook is the impact of tariffs. Last week's data showed that wholesale and retail companies are absorbing the imposed tariffs, limiting the pass-through to consumers, and keeping inflation more stable than expected. However, since concerns are growing about the potential deterioration of wholesale and retail performance and margins, it is important to pay close attention to this week's retail sales data."

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