[E-Daily Reporter Kim Kyung-eun ] With the KOSPI breaking through the 7,000 mark ahead of the Chuseok holiday, all eyes are on whether the upward trend will continue after the holiday. While trading typically slows down before Chuseok and the stock market tends to strengthen afterward, analysts note that this year’s starting point is different because stock prices have already risen significantly before the holiday. There are forecasts that the upward trend could continue if external factors—such as the U.S.-China summit, interest rates, and oil prices—are received favorably by the market during the holiday period.
According to MP Doctor on the 23rd, the KOSPI closed at 7,080.92, up 0.90% from the previous trading day. The cumulative gain over the past five trading days stood at 5.40%.
From 2000 through last year, the KOSPI rose in 14 out of 26 instances during the five trading days immediately preceding the Chuseok holiday. It fell in 12 instances, indicating no clear trend prior to the holiday. This is due to reduced trading activity as investors scale back their positions and lock in profits to avoid potential volatility during the long holiday.
This trend was also reflected in actual trading volume. According to Korea Investment & Securities, over the past five years, the average daily trading volume on the KOSPI around the Chuseok holiday fell from 10.7 trillion won before the holiday to 9.9 trillion won, before recovering to 11.6 trillion won afterward. Last week’s average daily trading volume on the KOSPI also fell to 20.1 trillion won, a decrease of 3.7 trillion won from the previous week.
On the other hand, there have been more years when the market rose after the Chuseok holiday. During the same period, the KOSPI rose during the five trading days following the holiday on 16 occasions, accounting for 61.5% of the total. Looking specifically at cases where the KOSPI rose before the holiday—as it did this year—the index continued to rise during the five trading days after the holiday in 8 out of 14 instances.
Whether the KOSPI will continue its upward trend after Chuseok this year is expected to be heavily influenced by external events scheduled during the holiday period. The biggest variable is the U.S.-China summit taking place in Washington on the 24th (local time), when the domestic stock market will be closed. Investor sentiment toward domestic export-oriented stocks could be affected by the outcome of discussions regarding tariffs, key minerals such as rare earth elements, and regulations on artificial intelligence (AI) semiconductors.
Yeo Tae-kyung, an analyst at Hyundai Motor Securities, commented, “It is unlikely that this summit will yield any surprises beyond market expectations,” adding, “Since the demands of both the U.S. and Chinese governments are clear, and the fact that the summit is taking place at all suggests a high probability that each side will be able to secure its demands from the other.” He went on to note, “It is positive that the uncertainty surrounding bilateral relations is unlikely to emerge as a risk factor for the economies and stock markets of both countries for the time being.”
U.S. interest rates and international oil prices are also variables. As U.S. economic indicators are released and Federal Reserve (Fed) officials make statements while the domestic stock market is closed, the cumulative movements in interest rates, oil prices, and exchange rates over the holiday period could be reflected all at once after the holiday.
By sector, analysts predict that interest will continue to focus on sectors that have recently shown relative strength, such as semiconductors. Given the recent decline in trading volume, analysts suggest it is more likely that the trend in existing leading sectors will continue rather than a rapid rotation of funds into new sectors. In particular, semiconductor stock prices are being supported by expanding AI investments and strong exports. The earnings report from U.S. memory chip maker Micron, scheduled for the 30th after the holiday, is also expected to contribute to this positive trend.
Kim Dae-jun, an analyst at Korea Investment & Securities, stated, “An environment where oil prices remain at $100 per barrel and the yield on 10-year U.S. Treasuries continues to rise, as it is now, is a factor that dampens investor sentiment.” He added, “Concerns over rising inflation and the resulting possibility of monetary tightening are sufficient to emerge as variables that could hinder a further rebound in the stock market.” However, he noted, “Internal risks related to the Korean stock market are not significant,” adding, “With extreme volatility having subsided, the fundamentals are solid enough to withstand external shocks.”
By sector, the analyst predicted, “Investors should maintain their current allocation to semiconductors,” noting, “Strong exports are supporting the upward trend, and Micron’s earnings are maintaining a steady upward trajectory, so the momentum for AI investments is not expected to weaken.” The analyst also added, “Positive trends in export-related industries with high overseas sales ratios, such as defense and cosmetics, are likely to continue.”
