[Edaily Reporter PARK MIN ] The domestic stock market is set to face a series of major variables this month, including U.S. employment and inflation data, as well as the Federal Open Market Committee (FOMC) meeting. In addition, concerns persist over geopolitical shocks originating in the Middle East—which are weighing on the market—along with the resulting surge in international oil prices and rising U.S. long-term Treasury yields. As a result, market volatility is expected to increase significantly even in response to minor negative factors.

Given the persistent seasonal weakness and downward pressure, securities analysts are advising investors to anticipate a range-bound market and to adopt a conservative, phased investment strategy focused on sectors with extremely low valuations and clear third-quarter earnings visibility. NH INVESTMENT & SECURITIES projected the KOSPI’s range for this week to be between 6,200 and 7,300.

◇ Market Holds Steady on Buying by Other Institutions, but Volatility Increases

According to MP Doctor on the 6th, the KOSPI fell 1.50% over the past week, from 6,788.88 (KRX closing price on August 28) to 6,687.21 (closing price on September 4). During the same period, the KOSDAQ dropped 2.97%, from 838.41 to 813.50. During the same period, SK hynix, one of the top two semiconductor companies, traded slightly lower, falling 0.36% from 1,653,000 won to 1,647,000 won, while SamsungElectronics edged down 0.85% from 257,000 won to 255,500 won.

Over the past week, the KOSPI often opened lower due to downward pressures such as a sharp rise in international oil prices stemming from geopolitical risks in the Middle East, inflation concerns, and rising U.S. long-term Treasury yields. However, during the trading sessions, share buybacks by SamsungElectronics(005930)and SK hynix(000660), along with “net buying by other corporations in the 1.5 trillion won range,” consistently supported the market’s bottom, allowing it to turn higher or close slightly flat each day.

However, as the week draws to a close, trading volume is steadily declining, while daily price fluctuations are widening. According to the Korea Exchange, KOSPI trading volume has plummeted from 27.542 trillion won on August 31 to 19.2034 trillion won on September 1 and further to 17.7263 trillion won on September 4. Consequently, there is a high likelihood that short-term stock price volatility will increase on the upcoming “simultaneous futures and options expiration day” on the 10th, depending on the direction of foreign investors’ futures and spot market investments.

Na Jeong-hwan, an analyst at NH INVESTMENT & SECURITIES, stated, “With recent declines in stock market trading volume, even modest selling pressure is leading to larger declines in stock prices,” adding, “If the downtrend resumes due to negative factors such as geopolitical risks, hedging demand could surge all at once, potentially amplifying the decline.”

Above all, with a “Big Week” looming this month—packed with events that will impact the domestic stock market, such as U.S. employment and inflation data and the Federal Open Market Committee (FOMC) meeting—attention is focused on whether the “treasury share buybacks by other corporations” will be able to withstand the global market turbulence. SK hynix’s 40 trillion won and SamsungElectronics’ 15 trillion won share buybacks are expected to be completed around mid-October, based on the current pace of purchases.

◇ Attention Focused on U.S. August CPI and PPI Releases

The U.S. August Producer Price Index (PPI) is scheduled to be released on the 10th (local time), followed by the Consumer Price Index (CPI) on the 11th. In particular, since both the August PPI and CPI will be released during the “blackout” period (September 5–17)—when Federal Reserve (Fed) officials are prohibited from making public statements ahead of the FOMC meeting scheduled for mid-month (September 15–16)—they are considered key indicators for gauging the direction of the September interest rate decision. Earlier, at the Jackson Hole Symposium in August, Fed Chairman Kevin Warsh made hawkish remarks—stating that “it is difficult to view underlying inflation as having slowed significantly”—which fueled market concerns about an interest rate hike.

Kwon Soon-ho, an analyst at DaishinSecurities, said, “With the Fed emphasizing its commitment to price stability, the August CPI and core CPI are highly likely to show a slowdown,” adding, “We expect the core CPI to rise 2.38% year-over-year, marking a new low for the year.” He further noted, “We anticipate the Fed will keep the benchmark interest rate unchanged at the September FOMC meeting.”

Apart from the release of key U.S. economic indicators, factors exerting downward pressure on the market remain. The biggest downside risk is geopolitical tension stemming from the Middle East. As military clashes between the U.S. and Iran resumed, West Texas Intermediate (WTI) crude oil broke through the $90-per-barrel mark, and the yield on the 10-year U.S. Treasury note surged to around 4.8%, sharply dampening investor sentiment toward risky assets.

Experts expressed concern that if the U.S. 10-year Treasury yield breaks through the 5% mark on a sustained basis, a sharp stock market decline could ensue. Lee Sang-jun, an analyst at NH INVESTMENT & SECURITIES, predicted, “The market expects the U.S. 10-year yield, which has surpassed 4.8%, to test the 5% level—the peak reached in 2023 when the Fed set the upper limit of its target range for the federal funds rate at 5.5%,” adding, “If it crosses 5% and continues to rise, downward pressure on stock prices will intensify.”

Despite these external headwinds, some analysts suggest that since the fundamentals of the domestic stock market remain solid, investors should view any increase in volatility as an opportunity to increase their exposure. South Korea’s August exports surged 68.7% year-over-year to $98.25 billion, with semiconductor exports in particular driving this momentum, soaring 209% year-over-year to $46.7 billion. The KOSPI’s 12-month forward price-to-earnings ratio (P/E) currently stands at around 5 times.

Lee Kyung-min, an analyst at DaishinSecurities, noted, “Excessive short-term volatility caused by external uncertainties can be utilized as an opportunity to increase exposure with a view toward valuation re-rating,” adding, “In particular, attention should be paid to sectors that are undervalued relative to their earnings—such as IT hardware, semiconductors, insurance, shipbuilding, and automobiles—where stock prices have not risen as much as earnings estimates suggest.”

Na Jeong-hwan, an analyst at NH INVESTMENT & SECURITIES, projected a weekly trading range of 6,200 to 7,300 for the KOSPI this week. He emphasized, “Even with solid semiconductor fundamentals, the environment makes it difficult to replicate the consecutive sharp rallies seen last June,” adding, “Ultimately, a strategy centered on semiconductors while also including sectors benefiting from broader trends—such as secondary batteries and AI platforms/services—is effective.”