KOSPI, will the 'Black Friday' nightmare end… NVIDIA earnings in focus [Weekly Outlook]

Reduced rate-cut expectations and AI bubble controversy

Consider the possibility of the index retreating to the 3900 level

Watch NVIDIA earnings on the 19th

Last week the KOSPI index ended on a 'Black Friday.' The index had steadily risen during the week and seemed to settle at the 4100 level, but on Friday (14th) it plunged 3.81%. As expectations for additional rate cuts in the U.S. weakened, domestic market investor sentiment was also damaged.

Securities firms said that this week (Nov. 17~21) the KOSPI index could fall further to the 3900 level. With net selling by foreign investors forming a trend, reduced expectations for rate cuts and the artificial intelligence (AI) bubble controversy could serve as additional negative factors.

On the 16th, NH Investment & Securities Research Center presented a projected trading range for the KOSPI this week with a low of 3900 and a high of 4250.

Because the index plunged on the previous trading day, attention is focused on this week's direction. The U.S. federal government's 'shutdown' (suspension of work), which began on Oct. 1, was lifted after 43 days, and there is concern that a flood of major economic indicators that had been delayed will be released, which has heavily dampened investor sentiment. 'Hawkish' remarks by key officials of the U.S. central bank (Fed) are also prompting selling pressure.

Na Jeong-hwan, a researcher at NH Investment & Securities, said, "Since price and employment indicator releases will follow after the end of the U.S. government shutdown, sensitivity to interest rates regarding future economic indicator changes could increase," and added, "In particular, the importance of future inflation indicators has been highlighted given that Fed members recently expressed concerns about inflation."

The fact that foreign 'selling' of the KOSPI has been pronounced recently is a particular concern. The KOSPI sold off 1.8642 trillion won worth last week. According to NH Investment & Securities, the sector where net selling was concentrated is semiconductors. It is interpreted that profit-taking and concerns over AI valuation burdens affected this. Securities firms also pointed out that the intensifying rise in the won·dollar exchange rate is a factor weakening foreign demand.

NVIDIA's earnings are scheduled this week (19th) amid the AI bubble controversy. Since big tech companies' results have been solid this earnings season, market interest is expected to focus more on margin improvement and revenue growth rates than on earnings surprises themselves. Also, what Jensen Huang, the chief executive officer (CEO), says about data center sales forecasts or the AI bubble controversy is likely to be a more important variable for the stock price.

A positive for the domestic market is that the flow of capital market improvements is becoming increasingly clear. Researcher Na said, "Government policies such as the provisional decision of the highest tax rate of 25% for separate taxation of dividend income and the approval of comprehensive investment accounts (IMA) for major securities firms are progressing gradually," and added, "Next week, discussions on mandatory treasury share cancellation could become concrete, and the ruling party's KOSPI 5000 special committee plans to introduce an amendment to require cancellation of existing treasury shares within one year."

He advised interest in financial stocks and holding companies with many treasury shares and small- and mid-cap stocks in growth industries, saying, "The domestic capital market improvement flow could also lead to activation of venture and small business investment, and funds could flow into venture companies in national advanced industry sectors through the National Growth Fund."

NH Investment & Securities named semiconductors (Samsung Electronics) and securities (Mirae Asset Securities), holding companies (SK), AI software (NAVER), and automobiles (Hyundai Motor) as sectors to watch this week.

Shin Min-kyung, Hankyung.com reporter radio@hankyung.com