'Will the 'Santa Rally' continue into early year…"Eyes on FOMC minutes" [Weekly Outlook]'

KOSPI, up 5.17% in December

Dissent notable at December FOMC

Confirming rate cut path via minutes

With the KOSPI restarting the 'Santa Rally', analysts say that the U.S. minutes from the December Federal Open Market Committee (FOMC), due this week (Dec. 29–Jan. 2), will determine the market's direction because they can indicate future monetary policy direction.

According to the Korea Exchange on the 28th, the KOSPI closed at 4,129.68 on the 26th, up 0.51% from the previous trading day. It rose 5.17% so far this month. During this period, the top two companies by market capitalization, Samsung Electronics and SK Hynix, led the gains, rising 16.42% and 13.02%, respectively.

Although the KOSPI is showing strength, some analyses say it remains undervalued. Jung Hae-chang, a researcher at Daishin Securities, said, "After reaching the 4,200 level in early November and then undergoing a correction, valuation (the price level relative to earnings) pressure has eased," and "with earnings estimates being revised upward centered on the semiconductor sector, KOSPI's upside potential is strengthening."

Attention is also increasing on the December FOMC minutes to be released on the 30th (local time). The U.S. central bank (Fed) cut the policy rate by 0.25% point in the December FOMC to an annual 3.5∼3.75%. However, three of the 12 voting members registered dissent over whether and by how much to cut the policy rate. It was the first time in six years, since 2019, that three members dissented at the FOMC.

Researcher Jung explained, "If the minutes provide clues about the future rate-cut path and discussions about short-term government bond purchases or ending quantitative tightening (QT) are highlighted, expectations for next year's liquidity environment could rise further."

The won-dollar exchange rate is expected to remain in the low-to-mid 1,400 won range as authorities actively intervene in the market. On the 26th in the Seoul foreign exchange market, the weekly settlement rate for the won-dollar exchange rate recorded 1,440.3 won, down 9.5 won from the previous day.

Earlier, the Ministry of Economy and Finance announced a 'Domestic Investment and Foreign Exchange Stabilization Tax Support Plan' that included measures such as tax support for domestic market return accounts (RIA), introduction of forward contracts for individual investors and deduction of capital gains tax when hedging currency exposure, and increasing the non-inclusion rate for income from dividends received from overseas subsidiaries. There is also analysis that the National Pension Service has fully activated 'strategic currency hedging.'

Lee Jin-gyeong, a researcher at Shinhan Investment, said, "With the aftermath of foreign exchange authority policy announcements continuing, the pressure toward a stronger won is expected to prevail," and "Korea's December export indicators are also expected to be solid. This is a factor supporting the won's fundamentals."

The year-end 'ex-dividend' shock is expected to be smaller than in previous years. Thanks to dividend modernization policies, many companies have moved their record dates for year-end dividends to February–March. According to IBK Investment & Securities, among the KOSPI200 constituents, about 54 stocks will have ex-dividend dates applied on the 29th.

Researcher Jung said, "One should prepare for the typical pattern of rotation selling that comes with year-end ex-dividend dates toward sectors with strong growth and earnings momentum," and "expectations for participating companies may rise ahead of 'CES 2026', which opens on January 6." CES is the world's largest information technology (IT) and consumer electronics exhibition held in Las Vegas every early year.

Meanwhile, domestic markets are closed on the last day of this year, Dec. 31, and on New Year's Day, Jan. 1. On the first trading day of next year, Jan. 2, due to the market opening ceremony, the regular markets of the Korea Exchange — KOSPI, KOSDAQ, and KONEX — will open one hour later than usual at 10:00 a.m. and close at the usual time of 3:30 p.m.

The alternative exchange NextTrade will also be closed on Dec. 31 and Jan. 1. On Jan. 2 next year, the pre-market (8:00–8:50 a.m.) will not be operated. The main market and large-volume/basket trading markets will all begin trading at 10:30:00 a.m. and end at the usual time.

Jin Young-gi, Hankyung.com reporter young71@hankyung.com