Why Did KOSPI Hit a New Record High Amid Chip Rally and US Rate Cut Hopes?

Seoul, Sep 12 (NationPress) South Korean equities reached a new all-time high on Friday, marking their ninth consecutive session of gains, fueled by a surge in semiconductor stocks and rising anticipation of a US Federal Reserve rate reduction next week. The Korean won appreciated against the US dollar.

The benchmark Korea Composite Stock Price Index (KOSPI) leaped 51.34 points, or 1.54 percent, closing at 3,395.54, surpassing the previous record of 3,344.2 set just the day before. This marks the third straight day the KOSPI has achieved a new peak, according to reports from Yonhap news agency.

Trading volume was moderate, with 444.9 million shares changing hands, amounting to 13.8 trillion won (approximately US$9.9 billion), and the number of gainers outpacing losers 521 to 344.

Foreign investors net bought local shares worth over 1.4 trillion won, while institutional investors acquired 611.4 billion won. In contrast, retail investors sold off 2 trillion won in profit-taking.

"The KOSPI's ascent aligns with the optimistic trends in U.S. stock markets, driven by expectations of a Fed rate cut and the burgeoning artificial intelligence (AI) sector," stated Han Ji-young, an analyst at Kiwoon Securities.

Overnight, major U.S. indices experienced gains, with the Dow Jones Industrial Average rising 1.36 percent, the tech-heavy Nasdaq composite climbing 0.72 percent, and the S&P 500 increasing by 0.85 percent.

Investor sentiment improved as the latest U.S. consumer price index (CPI) raised expectations for a Fed rate reduction next week.

The CPI indicated that inflation remains above the Fed's 2 percent target, yet is stable enough to prompt a rate cut, particularly given the softening labor market.

Han also noted that speculation regarding the potential withdrawal of the controversial capital gains tax hike proposal by the Korean government has enhanced investors' risk appetite.

During a press conference marking his first 100 days in office, President Lee Jae Myung stated there is no compelling reason to proceed with the initial plan to lower the capital gains tax threshold for stock investments, which had raised concerns among local investors.

In Seoul, leading stock Samsung Electronics surged 2.72 percent to a yearly high of 75,400 won, while chip competitor SK hynix soared 7 percent to reach an all-time high of 328,500 won.

Internet portal operator Naver rose 1.29 percent to 236,000 won, and Kakao, the dominant mobile messenger service, skyrocketed 9.35 percent to 65,500 won.

SK Square, an investment firm focused on semiconductors and IT, jumped 8.35 percent to 197,300 won, while leading battery manufacturer LG Energy Solution gained 1.57 percent to 355,500 won.

Instant noodle producer Nongshim surged 6.97 percent to an all-time high of 522,000 won due to increased exports driven by the popularity of ramyeon featured in the global-hit animation film, K-Pop Demon Hunters.

Major financial shares also performed well, with KB Financial up 1.45 percent to 119,300 won and Shinhan Financial rising 2.21 percent to 69,300 won.

However, major shipbuilders experienced declines following a recent rally.