[Edaily Reporter Kim Kyung-eun ] Analysts say that while the KOSPI has rebounded following a sharp decline, it is too early to conclude that it has returned to a sustained upward trend. Although investor sentiment has improved somewhat—with foreign investors turning to net buying for the first time in eight trading days and institutions buying on the dip—market volatility remains high. The securities industry forecasts that the KOSPI is likely to continue fluctuating as it tests its lows for the time being.

Kang Hye-seong, an analyst at SANGSANGINVESTMENT&SECURITIES, stated in a report on the 11th, “While the fear that had gripped the market appears to be subsiding for now, it is difficult to view this as a clear recovery.”

The KOSPI fell below the 5,000 mark during trading last week but has been on an upward trend this week, buoyed by a rebound in U.S. semiconductor stocks. The Philadelphia Semiconductor Index rose 4.2% on the 6th and 6.9% on the 9th, leading the rebound in the domestic stock market.

However, analysts assess that the strength of the rebound is not yet sufficient. The domestic stock market opened higher on both the 9th and 10th, but closing prices fell below the opening prices. Analysts interpret this as a sign that investor sentiment remains unstable, as the market was unable to sustain its early gains through the end of the trading session.

From a supply-and-demand perspective, positive changes have emerged. Foreign investors, who had been selling domestic stocks for eight consecutive trading days, turned to net buying, and institutional investors also began buying, focusing on stocks that had suffered sharp declines. SK hynix(000660)’s share buyback program, totaling approximately 350 billion won per day, was also cited as a factor supporting the index’s bottom.

However, observers point out that market volatility must subside for foreign capital to continue flowing in. The KOSPI 200 Volatility Index (VKOSPI) has recently re-entered the 60% range. With the domestic stock market still up more than 20% since the start of the year, high volatility could constrain the inflow of foreign capital.

External factors also pose a burden. The U.S. Consumer Price Index (CPI) for October rose 0.4% month-over-month, exceeding the market forecast of 0.3%. Core CPI also rose 0.3%, exceeding the forecast of 0.2%. Additionally, concerns about monetary policy have intensified after Christopher Waller, a member of the U.S. Federal Reserve (Fed), hinted at the possibility of a 0.5 percentage point interest rate hike.

It is positive that concerns regarding artificial intelligence (AI) investments have eased somewhat. Analysts note that anxiety over the potential end of the AI industry’s growth cycle is subsiding, as concerns about a slowdown in data center investments—which recently triggered a sharp stock market decline—are now being viewed as a matter of schedule delays rather than construction halts.

The fact that CoreWeave, a U.S. AI cloud company, reported earnings that exceeded market expectations and raised its annual revenue forecast also contributed to improved investor sentiment. The downward trend in international oil prices is another factor that is helping to alleviate inflationary pressures to some extent.

Analyst Kang stated, “For foreign capital to continue flowing in on a net basis, volatility—which has surged since the beginning of the year—must subside,” adding, “I see a high likelihood of short-term volatility as the market searches for a bottom.”