On Tuesday, South Korean stocks staged a powerful rebound. As of press time, the KOSPI index had surged more than 4% to 5,690.64 points. Among individual stocks, SK Hynix climbed over 6%, while Samsung Electronics gained more than 4%. During intraday trading, the Korea Exchange activated the SIDECAR mechanism, halting program buying on the KOSPI.
A confluence of positive factors drove the rally, with the trigger pointing to overnight U.S. markets. On Monday local time, U.S. artificial intelligence company Anthropic formally submitted its S-1 registration filing to the U.S. Securities and Exchange Commission, planning a mid-November listing on the Nasdaq under the ticker "ANT." The market estimates its valuation could reach as high as $2 trillion, with a planned fundraising of $100 billion, which if successful would become the largest IPO in U.S. stock market history. Han Ji-young, an analyst at Kiwoom Securities, noted that the filing has to some extent alleviated market concerns about AI monetization capabilities, and the "AI profitability debate" that had been weighing on chip stocks has clearly cooled.
Meanwhile, financing channels across the AI supply chain have opened up simultaneously. Meta announced plans to raise up to $95 billion through the issuance of common and preferred shares to fund AI research and development; SpaceX reached an approximately $40 billion equipment financing lease agreement with Apollo Global Management to procure GPUs in support of its AI business expansion. The combination of these two developments sparked a collective rebound in computing cloud service providers and chip stocks that had previously suffered heavy losses. According to Korea Exchange data, on the morning of the 27th, foreign investors net purchased 472.1 billion won, while retail and institutional investors net sold 519.1 billion won and 19.8 billion won, respectively.
Domestic South Korean news also provided tailwinds. On the macroeconomic front, data released by the Bank of Korea that day showed third-quarter real GDP grew 1.0% quarter-on-quarter, far exceeding the market expectation of 0.7% and the central bank's August forecast, with year-on-year growth of 3.4%. Semiconductor exports and equipment investment were the main growth engines, with cumulative exports from January to September exceeding $800 billion, surpassing last year's full-year record. Bank of Korea officials stated that driven by HBM production effects, chip output is expected to rise next year, with prices continuing to climb but at a slower pace. On the individual stock front, according to South Korean media citing industry sources, SK Hynix plans to announce an additional shareholder return package worth 50 trillion to 60 trillion won on the 28th, which combined with the previously completed 40 trillion won buyback and cancellation, would bring total returns this year to a record 100 trillion won. Some investors believe that corporate shareholder return policies are a key means of resolving the divergence between record profits and lackluster share prices for chipmakers.
Tech giant earnings and the Federal Reserve are key. Currently, the market is closely watching SK Hynix and Samsung Electronics' third-quarter results as well as the Federal Reserve's monetary policy meeting. Han Ji-young believes technical pressures remain, but after midweek, as the FOMC meeting and major tech and semiconductor earnings are released, market sentiment could reverse. "At this stage, it is not advisable to further reduce positions; priority should be given to holding positions and waiting for improved stock price resilience."
Additionally, the U.S. midterm elections loom as a "Sword of Damocles" over the market. Data shows that among the 9 U.S. midterm elections held between 1990 and 2022, the KOSPI index posted positive returns within 12 months after 6 of them. Lee Kyung-min, a researcher at Daishin Securities, pointed out that U.S. midterm elections do not reset the direction of the KOSPI index, but rather serve as a variable that amplifies the earnings cycle of South Korean companies. "U.S. elections do not change the overall market direction, but only amplify South Korea's own economic cycle." The firm estimates that KOSPI constituent earnings per share will rise 34% in 2027, and projects that under a Democratic-dominated or divided government scenario, the KOSPI is expected to trade between 5,200 and 6,700 points in the fourth quarter and between 6,000 and 7,500 points in the first quarter of next year. In terms of investment strategy, Daishin Securities recommends that if the index falls below 5,600 points before the election, investors can gradually buy on dips, with semiconductors, shipbuilding, and biopharmaceuticals as preferred sectors. However, the firm also cautions that if Republicans achieve a "red wave" landslide, the index floor could drop to 4,950 points, and although the probability of this scenario is only about 8%, the downside risk should not be ignored.
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