The KOSPI index is currently contending for the 7000 mark, with next week’s domestic stock market focusing on whether the momentum from artificial intelligence (AI) and semiconductors will continue. However, with international oil prices exceeding $100 per barrel and U.S. long-term interest rates remaining high, there is potential for increased volatility due to these factors. Analysts suggest that while fluctuations driven by external variables are inevitable in the short term, the growth of the AI industry and the fundamentals of the semiconductor sector remain strong.
According to the Korea Exchange, as of September 9, the KOSPI rose to 7051.64, an increase of 488.92 points (7.45%) from the previous week. This marks the first time the KOSPI has surpassed the 7000 level since July 23.
This week, the domestic stock market was buoyed by expectations of increased investment in AI, particularly in semiconductor stocks. The unveiling of OpenAI's latest model, GPT-6 Astra, has heightened expectations for expanded AI applications, leading to forecasts of increased demand for AI infrastructure and semiconductors.
Astra is noted for significantly enhancing AI's ability to operate computers, allowing AI to use a mouse and keyboard like a human. This advancement is expected to broaden the scope of AI applications and increase market size, positively impacting the domestic semiconductor sector.
As a result, the construction and architecture sector saw the highest increase this week, rising by 12.8%, followed by machinery (11.9%) and semiconductors (11.1%). In contrast, sectors such as cosmetics, apparel, and toys (-5.8%), consumer staples (-5.2%), and hotels and leisure (-2.1%) performed relatively poorly.
From a supply and demand perspective, institutional and foreign investors drove the index's rise. This week, individuals sold a net 16.8363 trillion won, while institutions and foreigners bought a net 6.8177 trillion won and 3.2710 trillion won, respectively.
However, the high oil and interest rate environment could limit the upward momentum of the domestic stock market. Ongoing military tensions between the U.S. and Iran, along with continued clashes between Saudi Arabia and Houthi rebels, have contributed to rising international oil prices, with Brent crude surpassing $100 per barrel. Additionally, the yield on U.S. 10-year Treasury bonds has risen to 4.85%.
Labor researcher Noh Dong-gil from Shinhan Investment Corp. stated, "Concerns about demand for AI infrastructure peaked following the latest earnings reports from hardware and hyperscaler companies like Broadcom and Oracle. The semiconductor earnings for the third quarter are unlikely to fall below expectations."
The issue lies more with interest rates and discount rates than with corporate earnings, according to analysts. With heightened caution ahead of the upcoming Federal Open Market Committee (FOMC) meeting and international oil prices exceeding $100 per barrel, rising term premiums could place pressure on stock market valuations.
Noh added, "In a situation where discount rates are more concerning than earnings, the recovery of deep-value sectors is likely to slow. Even in a high-interest and high-oil price environment, sectors like energy and finance, which are seeing favorable changes in profits, as well as semiconductors and automobiles, should be prioritized for market response to enhance supply and yield stability."
Next week, the direction of the U.S. Federal Reserve's monetary policy will also be a key variable. Analysts suggest that during the FOMC meeting scheduled for September 16-17, more attention should be paid to the dot plot and comments from Fed Chair Jerome Powell, particularly regarding the direction of U.S. long-term interest rates, rather than the decision on the benchmark interest rate itself.
Lee Sang-jun, a researcher at NH Investment & Securities, projected the KOSPI's range for next week to be between 6400 and 7400. Factors supporting an increase include a decline in international oil prices and expectations for AI investment following the Astra announcement, while potential declines could stem from escalating U.S.-Iran conflict and further increases in market interest rates.
Lee noted, "The KOSPI's recovery above 7000, driven by the Astra effect in the semiconductor sector, indicates that the fundamental framework of AI industry development and its benefits to the Korean market remain robust. While short-term volatility due to external risks is inevitable, it is important to distinguish this from fundamental damage."
Additional AI-related events are also on the horizon. An AI infrastructure summit is scheduled for September 15-17, and Micron's earnings report is expected at the end of this month, which could sustain expectations for global AI investment and semiconductor demand.
Lee highlighted sectors of interest, including semiconductors, energy storage systems (ESS), AI platforms and services, and securities. Specific stocks mentioned include Samsung Electronics, LG Energy Solution, SK Telecom, NHN, and Samsung Securities.
However, given the recent rapid rise, there is a possibility of increased volatility during any further upward movement. Labor researcher Noh assessed that the market is likely to exhibit a W-shaped pattern of fluctuations rather than a sharp V-shaped rebound.
Ultimately, next week’s domestic stock market is expected to be a period of confirming whether the KOSPI can settle above 7000, as expectations for AI and semiconductor growth contend with the pressures of high oil prices and interest rates. If the growth in the AI industry translates into improved semiconductor profit forecasts, it could provide additional upward momentum, but a simultaneous rise in oil prices and interest rates may slow the pace of increases.
* This article has been translated by AI.
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