KOSPI also rises 1.6% as U.S. tech stocks rebound; bargain hunting picks up [fn Morning Market]

[Financial News] South Korean stocks opened higher, buoyed by a rebound in U.S. tech stocks and bargain hunting after the recent sharp decline.
U.S. Treasury yields rose amid caution ahead of the U.S. midterm elections and uncertainty over U.S.-Iran negotiations, but buying interest is also flowing into domestic semiconductor stocks as major AI-related shares such as NVIDIA and Micron strengthen.
The growing appeal of stocks, with the KOSPI's forward price-to-earnings ratio (PER) falling below 4x for the first time since June 2000, is also supporting investor sentiment.
According to the Korea Exchange (KRX), as of 9:33 a.m. on the 4th, the KOSPI was up 91.76 points (1.62%) from the previous trading day at 5,740.55. The KOSDAQ Index gained 2.40 points (0.34%) to 706.79.
Among the stocks with the largest market capitalizations, Samsung Electronics was trading up 1.59% at 223,000 won, while SK hynix was up 2.58% at 434,000 won. SK Square (4.12%) and Hanwha Aerospace (2.30%), along with Samsung Electronics and SK hynix, were also strong.
By contrast, some automakers, including Hyundai Motor (-0.18%) and Kia (-0.31%), were performing relatively poorly.
Overnight in New York, large-cap tech stocks tied to AI supported the market. On the 3rd local time, U.S. stocks were mixed amid a wait-and-see mood ahead of the midterm elections and concerns about slowing end-user demand that emerged after Apple's earnings announcement.
Apple fell 1.9%, while Micron rose 2.6%, NVIDIA gained 2.3%, and Microsoft (MS) advanced 2.7%. The Dow Jones Industrial Average fell 0.4%, but the S&P 500 and NASDAQ Composite rose 0.4% and 0.8%, respectively, while the Philadelphia Semiconductor Index also gained 2.6%.
Even as political uncertainty persists in the United States, optimism about AI investment and the semiconductor industry outlook has partly offset downward pressure across the stock market. This has helped drive the rebound in South Korean stocks, led by large-cap semiconductor shares.
Han Ji-young, an analyst at KIWOOM Securities Co., Ltd., said, "The market rebounded despite the pressure from rising U.S. interest rates amid a wait-and-see mood ahead of the U.S. midterm elections and noise surrounding U.S.-Iran negotiations, buoyed by strength in major U.S. AI stocks and greater incentives to bargain-hunt after the recent sharp decline (with the KOSPI's forward PER at 3.96x, below 4x for the first time since June 2000)."
The sharp decline in valuation concerns in the South Korean stock market is noteworthy. The KOSPI's forward PER has fallen to 3.96x for the first time since June 2000. Analysts say the recent plunge in share prices has lowered valuations relative to companies' earnings forecasts, creating conditions for investors to reassess the market's appeal.
However, lower valuations alone are not enough to conclude that the market has entered a sustained uptrend. Whether corporate earnings forecasts hold up and foreign investor flows improve will determine how long the rebound lasts.
Trading flows have not yet clearly shifted to net buying by foreign investors. As of 9:33 a.m., individual investors had net sold 57.6 billion won and foreign investors 81.8 billion won in the KOSPI market, while institutions had net bought 20.7 billion won.
In the KOSDAQ market, individual investors had net bought 95.7 billion won, while foreign investors and institutions had net sold 74.4 billion won and 6 billion won, respectively. Despite the KOSPI's rise, individuals and foreign investors remain net sellers, with institutional buying and strength in large-cap semiconductor stocks underpinning the index's gains.
The market is watching the outcome of the U.S. midterm elections and developments in U.S.-Iran negotiations. The possibility of a shift in the balance of power in the U.S. Congress and geopolitical uncertainty in the Middle East could affect interest rates and appetite for risk assets.
South Korean stocks are seeing a technical rebound after their recent losses, alongside buying focused on AI semiconductors. However, the rebound could remain limited unless foreign investor flows recover and external uncertainties ease.
[email protected] Kang Jung-mo Reporter