Tracking momentum, Korean stocks expected to keep breaking ceilings into Q4

An electronic display at a Hana Bank dealing room in Seoul shows the Kospi closing at an all-time high of 3,549.21 on Oct. 2, surpassing the 3,500-mark for the first time in history. (Yonhap)
An electronic display at a Hana Bank dealing room in Seoul shows the Kospi closing at an all-time high of 3,549.21 on Oct. 2, surpassing the 3,500-mark for the first time in history. (Yonhap)

As South Korea prepares to resume trading Friday after a weeklong Chuseok holiday, global assets from stocks to gold surged to new highs on Thursday, signaling continued strength for Korean markets after the break.

On Wall Street, major indices extended their climb Wednesday, with the Nasdaq composite and the S&P 500 closing at record highs, up 1.1 percent and 0.6 percent, respectively. The Dow Jones Industrial Average was little changed, ending just below the flatline.

The rally easily erased Tuesday’s brief pullback, which had ended a seven-day winning streak, as renewed optimism in the artificial intelligence sector eased fears of an AI bubble. Advanced Micro Devices led the gains, extending its rally for a third straight session after unveiling a major chip deal with ChatGPT maker OpenAI on Monday.

AI chip leader Nvidia rose 2.2 percent after CEO Jensen Huang told CNBC that AI demand has increased “substantially” this year and that the boom remains in its early stages, leaving room for further growth.

Optimism around AI also lifted other hardware and tech names. Dell Technologies jumped 9 percent, while Amazon gained 1.6 percent, Tesla 1.3 percent, Apple 0.6 percent and Microsoft 0.2 percent.

In a rare alignment, defensive assets advanced alongside equities as uncertainty surrounding US politics and the economy spurred a flight to safety. Spot gold broke above $4,000 an ounce for the first time Wednesday, up 54 percent so far this year, while silver hit a record $49.57, extending its year-to-date surge of more than 70 percent.

Precious metals have staged a powerful rally this year, extending last year’s gains as geopolitical tensions and trade risks fueled demand for risk-off assets. The upswing gained urgency as investors sought protection from potential market shocks following the US government shutdown that began last Wednesday amid a bipartisan budget standoff, and as the Federal Reserve’s easing cycle appears set to continue through year-end.

With a global rally lifting sentiment, Korean stocks are poised to extend their gains through the rest of the year, driven by stronger earnings in the nation’s top export sector, semiconductors, analysts said.

Market data provider FnGuide said local brokerages expected the Kospi to range between 3,115 and 3,725 in the fourth quarter. The benchmark broke above 3,500 for the first time on Oct. 2, hitting an intraday high of 3,565 before closing at 3,549.

“The earnings season unfolding through October and November is expected to support the overall trend, with strength in semiconductors offsetting other weaker sectors,” said Noh Dong-kil, an analyst at Shinhan Securities, who added that foreign fund outflows initially seen in the quarter will be eased as the market digests third-quarter earnings.

Chipmakers have led the recent surge, with Samsung Electronics topping 90,000 won ($63) intraday for the first time in nearly five years and SK hynix setting a new all-time high. Both are expected to post strong third-quarter earnings, extending the semiconductor-led momentum.

Lee Eun-taek, an analyst at KB Securities, projected that the improvement in semiconductor earnings will continue through the first half of next year as global chipmakers enter restocking cycle to meet rising demand.

Still, analysts cautioned that markets could face short-term swings from recent price gains and currency volatility.

“The macro environment in the fourth quarter isn’t as favorable as in the first half, particularly on the exchange-rate front,” said Lee of KB Securities. “While the dollar may weaken slightly, the won remains uncertain given trade-related and investment-outflow factors.”

Kim Dae-joon, an analyst at Korea Investment & Securities, said that while earnings forecasts are improving, the won has weakened to a burdensome level, likely affecting foreign inflows. "Exports and interest rates will be the key variables shaping the market’s trajectory going forward," he added.

The won closed above 1,400 per US dollar for seven straight sessions before the holiday, underscoring persistent volatility. In offshore trading, it briefly weakened past 1,420 per dollar on Wednesday, signaling continued pressure ahead of Friday’s market reopening.


jwc@heraldcorp.com