Next week, the domestic stock market is expected to seek direction based on the earnings reports from Samsung Electronics and SK Hynix, as well as any announcements regarding additional shareholder returns. Recently, the KOSPI has experienced a sharp decline due to concerns over the profitability of AI investments and foreign selling pressure. However, analysts believe that if improvements in earnings and shareholder returns are confirmed, the supply-demand imbalance could be alleviated.
According to the financial investment industry on October 23, NH Investment & Securities projected the KOSPI to range between 5,100 and 6,400 points next week. Factors contributing to potential gains include third-quarter earnings and shareholder return plans from major companies, while geopolitical risks are cited as potential downward pressures.
The most anticipated events are the earnings announcements from SK Hynix on October 28 and Samsung Electronics on October 29. There is particular interest in whether additional share buybacks and shareholder return plans will be disclosed alongside the earnings reports. Given the recent decline in the KOSPI, there has been a lack of buyers to absorb the foreign selling, making shareholder returns from major semiconductor firms a potential catalyst for improving supply-demand dynamics.
Na Jeong-hwan, a researcher at NH Investment & Securities, noted that the recent decline in the stock market is attributed to a lack of buyers to absorb foreign selling rather than a deterioration of fundamentals. He estimated that SK Hynix's additional shareholder return resources exceed 30 trillion won, stating, "If a large-scale share buyback is confirmed, buying interest from other corporations could absorb some of the foreign selling, thereby alleviating the supply-demand imbalance in the KOSPI."
The recovery of investor sentiment regarding AI investments is also a key variable. Earnings from SpaceX and Supermicro have confirmed the growing demand for AI computing and robust data center investments. Conversely, Meta's transition to negative free cash flow and Tesla's adjustments to its investment plans have raised concerns about whether profitability can keep pace with the scale of AI investments. Analysts suggest that confidence in the sustainability and profitability of AI investments must be established through upcoming earnings from major tech firms to ease market anxieties.
Lee Kyung-min, a researcher at Daishin Securities, believes that despite the recent market adjustments, there is potential for normalization in KOSPI valuations. He analyzed that the recent sharp decline is a result of macroeconomic pressures and overlapping concerns about AI credit and profitability rather than a deterioration of fundamentals. He emphasized that next week’s major tech earnings will be crucial in reinforcing confidence in the sustainability and profitability of AI investments.
U.S. monetary policy and international oil prices are also expected to influence market direction. The Federal Open Market Committee (FOMC) meeting is scheduled for October 29, with the market closely watching not only the decision on interest rates but also the future trajectory of monetary policy. Continued inflationary pressures due to high oil prices could hinder a market rebound if the Federal Reserve strengthens its tightening stance. Additionally, ongoing geopolitical instability in the Middle East could keep international oil prices elevated, potentially weighing on investor sentiment.
Ultimately, next week’s stock market will be influenced by both individual corporate factors, such as semiconductor earnings and shareholder returns, and macroeconomic variables like interest rates and oil prices. If improvements in earnings are confirmed and additional shareholder returns can absorb foreign selling, the supply-demand imbalance may ease. However, ongoing doubts about AI investment profitability and geopolitical uncertainties could continue to drive volatility.
* This article has been translated by AI.
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