KOSDAQ Tests the 900 Level… October Risks in Focus Amid Strong Exports and Rate Uncertainty

After fluctuating intraday, the KOSPI held near flat at 6,997 points, close to the 7,000 level. The KOSDAQ extended its gains after surging 4% the previous day, touching 900 intraday and trading at around 894 points during the broadcast. The KOSDAQ rose for a sixth consecutive session and had advanced on every trading day since mid-September except one.

Foreign investors were net sellers in the cash markets for both the KOSPI and KOSDAQ. Their cash-market selling in the KOSPI was substantial, and they sold about 90 billion won in the KOSDAQ. In the futures market, however, foreign investors made net purchases in the 500 billion won range, moving in the opposite direction from their cash-market activity. The previous day, more than 1,100 stocks rose as foreign and institutional investors both bought shares.

The first key October event was the U.S. September employment report, due on the day of the broadcast. Next week, Samsung Electronics is scheduled to release preliminary earnings, followed by TSMC on the 15th, ASML the previous day, and SK hynix at the end of October. With FOMC, European Central Bank and Bank of Japan policy meetings also on the calendar, the month is expected to be crowded with earnings and interest-rate events.

The U.S. September employment report was identified as a key indicator for assessing the interest-rate outlook while government bond yields remain high. With inflation data yet to provide a clear signal, strong employment could heighten rate-hike concerns, while a slowdown could ease rate pressures, keeping the market focused on the report.

Corporate earnings will be monitored in sequence, starting with Samsung Electronics’ preliminary results, followed by TSMC on October 15, ASML the day before, and SK hynix at the end of October. The schedule will test whether strong semiconductor exports are translating into actual revenue and earnings. The broadcast mentioned October 27 or 29 as the timing of SK hynix’s earnings release.

On the monetary policy calendar, the October FOMC decision was expected around the 29th, Korea time. The Fed typically holds eight meetings a year at roughly six-week intervals, with the October and December meetings still to come. With meetings of the European Central Bank and the Bank of Japan also ahead, October was characterized as a month in which earnings and interest-rate decisions converge.

Estimates based on semiconductor export performance put earnings at about 118 trillion won for Samsung Electronics and about 76 trillion won for SK hynix. These are forecasts derived from reported export trends, not confirmed earnings. The broadcast discussed the possibility that Samsung Electronics could report results slightly above market expectations.

Samsung Electronics is scheduled to release preliminary earnings next week, followed by results from TSMC and ASML in mid-October and SK hynix at month-end. A key focus this month will be whether growth in semiconductor exports translates into actual corporate earnings and order trends.

September exports were reported at about US$60.3 billion, a record level. Compared with US$46.7 billion in August of the previous year, the increase was said to be about 30%, and annual exports had already exceeded US$800 billion, with the full-year total forecast to surpass US$1 trillion. Monthly export records have been repeatedly broken, and it was also emphasized that growth is not concentrated solely in semiconductors.

Although semiconductors account for a large share of total exports, growth in exports from other industries and small and medium-sized enterprises was also seen as positive. Cosmetics exports remained strong. With cosmetics stocks recently declining, the discussion emphasized the need to distinguish factors weighing on share prices, such as exchange rates, from actual export performance and industry conditions.

Export data can be monitored through the Ministry of Trade, Industry and Energy’s monthly trade figures, released at the beginning of each month. The presenter stressed that investors should track export and industry data consistently, rather than paying attention only when share prices rise. If exports are increasing while related stocks are correcting, investors should assess whether companies’ fundamentals have deteriorated or whether share prices are reacting to short-term market factors.

The KOSDAQ rose from 821 points on the first trading day of September to 900 intraday. The recent rebound has drawn attention for broadening into industries with earnings support, including semiconductor materials, components and equipment, cosmetics, and some nuclear-related stocks. Unlike the previous rally toward 1,200, which was led by expectation-driven stocks such as biotech and robotics, the current rebound was described as relatively sturdier because it includes companies with visible revenue and earnings.

Optical communications have emerged as a rising theme, linked to demand for next-generation networking as investment in data centers and AI infrastructure expands. Copper wiring has limitations in heat generation, power consumption and transmission speeds, prompting demand to replace chip-to-chip connections with optical communications. The discussion also emphasized that addressing power shortages at AI data centers requires not only expanding power generation capacity but also technologies that reduce the electricity needed for data processing and transmission.

Korean semiconductor materials, components and equipment companies could directly benefit from expanding AI investment, while energy storage systems (ESS) were cited as a way to offset the intermittency of solar and wind power. However, it remains uncertain whether Korean optical communications companies can secure a dominant position in global supply chains. Competition with Chinese companies on price and the scope of U.S. restrictions on China are also potential factors. A U.S. Senate bill that would have made hyperscalers bear data center power costs did not pass and could be revisited after the midterm elections, potentially shaping investment decisions by related companies.

The U.S. 10-year Treasury yield exceeded 5.34% intraday, reaching its highest level since 2002. Government bond yields in major economies, including the United Kingdom and France, also moved sharply, highlighting instability in global bond markets. Government bond yields were treated as a key market variable because they affect discount rates and investment benchmarks for risk assets such as equities.

The U.S. ISM manufacturing purchasing managers’ index came in below expectations, while its prices-paid component signaled inflationary pressure. The discussion also noted that, rather than broad strength in manufacturing demand, investment in AI infrastructure appeared to be driving demand in specific areas. Rising oil prices added to inflation concerns, but U.S. Treasury yields gave back some of their intraday gains and ended lower.

In the United Kingdom, government bond yields exceeded 6%, while the yield spread between French and benchmark German government bonds was reported to have widened from about 80 basis points to 130 basis points. Uncertainty over France’s fiscal and political outlook, along with comments pointing to the possibility of rate hikes in the United Kingdom, pushed European yields higher. By contrast, flows away from European bonds into U.S. Treasuries and comments from Federal Reserve officials contributed to the intraday pullback in U.S. yields.

Among comments from Fed officials, attention focused on remarks by Neel Kashkari, known for his hawkish stance, that he did not have a firm position on whether to raise rates in October and was open to the pace of rate increases. The market focused on the unusually dovish element of his comments rather than his usual hawkish remarks. Rising bond yields mean falling bond prices, and the broadcast noted that yields at elevated levels were drawing greater interest in bond purchases from both institutional and individual investors.

Financial authorities were reported to be considering measures requiring large securities firms to publish research reports on small and mid-cap stocks and setting a minimum share of research devoted to small caps. Another proposal would allow analysts to choose whether to include their names on sell-rating reports, reducing the burden of having their identities disclosed when issuing such recommendations.

Small and mid-cap stocks and KOSDAQ-listed companies often have limited analysis and corporate information available to investors. It was emphasized that increasing research staff and report publication at securities firms could improve investor access to information and broaden the basis for evaluating companies in the market. The view was also expressed that directing some securities-firm revenue toward expanding research would benefit investors and the KOSDAQ market.

The mandatory tender offer bill, which had passed the National Assembly’s Political Affairs Committee, was put on hold before being brought to a plenary session. A mandatory tender offer is intended to give ordinary shareholders the opportunity to sell their shares on the same terms when a controlling shareholder’s stake is traded to secure management control, addressing the problem of control premiums accruing exclusively to the major shareholder. The broadcast noted that the system was introduced in South Korea in 1997 and later abolished after the Asian financial crisis in the interest of promoting mergers and acquisitions.

The bill proposed requiring an acquirer to make a tender offer for enough shares to secure 50% plus one share. Critics argued that this would not guarantee all remaining shareholders the opportunity to sell even after control had changed hands. They also said a loophole would remain, since an acquirer could first buy the major shareholder’s stake off-market and then make a tender offer only for additional shares. Eighteen asset management firms and governance-related organizations also raised concerns about the bill’s design.

The central question is whether the system can be designed to give all shareholders the same terms or allocate the opportunity to sell in proportion to their holdings, rather than merely raising the tender-offer threshold slightly. The discussion highlighted the view that rights should be distributed fairly, since a corporation is structured to share investment risks among its shareholders. It was also argued that investors should stay engaged and express their views to ensure the discussion does not stall after the bill was put on hold.

Pre-applications for a program supporting young people’s first National Pension contributions opened on October 1. At the time of the broadcast, 92 people had applied. Applicants aged 18 or older can receive support equivalent to one month of pension contributions, calculated at the lower limit of the standard monthly income. Parents may apply on their behalf, and the relevant process was outlined online.

Although the support covers only one month, it was emphasized that it helps young people begin building their contribution period earlier. In the past, families with greater financial means sometimes enrolled their children in the pension system as soon as they turned 18. The program was presented as a way to help young people start contributing and reduce that gap. The discussion called for informing eligible young people about the program and encouraging them to apply.

In response to concerns that providing support only to young people may be inequitable, the view was raised that the program could be expanded gradually. The discussion also identified ongoing questions: whether it is appropriate to support only those who apply rather than automatically enrolling all eligible people, and whether it makes sense to require individuals to apply directly to receive welfare benefits.

Lee Kwang-soo said investment risk should be understood not simply as the possibility of a loss but as uncertainty. The greater the pursuit of returns, the greater the chance that unexpected events will occur; reducing that uncertainty, however, can help investors manage risk while increasing returns. Citing data comparing long-term investment periods in the S&P 500, he explained that the likelihood of losses tends to decline as the investment horizon lengthens.

He stressed that long-term investing does not mean holding one stock indefinitely, but rather remaining in the stock market over the long run. Even when returns accumulate through compounding, a single major loss can undo cumulative performance. Investors should therefore define the losses they can tolerate and plan how to respond to a downturn before buying. He said that controlling one’s investment process, rather than fixating on outcomes, is the foundation of long-term investing.

He suggested keeping an investment record of the reasons for buying, the tolerable range of losses, changes during the holding period and the reasons for selling. Recording why an investment was made and the principles used to manage it, rather than simply checking the account’s rate of return, makes it possible to review past decisions. Invoking Warren Buffett’s analogy that “investing is baseball without called strikes,” he urged investors to wait for good opportunities rather than trade impatiently, while continuing to observe the market and focus on the investment process.