Can ‘Roller Kospi’ Settle? Focus Turns to U.S. Hyperscaler Earnings as Kospi Seen at 6,700-7,600

NH Investment & Securities sees the Kospi at 6,700 to 7,600 this week

Brokerages expect the Kospi to keep swinging around the 7,000 level in the week of July 27-31. The benchmark was so volatile last week that investors coined the term “Roller Kospi,” a play on roller coaster and the Kospi. On July 24, the final trading day of the week, the index closed at 6,690.62, down 406.27 points, or 5.72%, from the previous session.

NH Investment & Securities said on July 26 that it sees the Kospi moving in a 6,700 to 7,600 range this week. It cited easing concerns over artificial intelligence capital spending and upward revisions to earnings forecasts as upside drivers. A broader military conflict between the U.S. and Iran was flagged as a downside risk.

Lee Sang-jun, an analyst at the brokerage, said Alphabet’s second-quarter earnings helped ease recent market concerns over AI capital spending. The company raised its capital expenditure outlook for this year to $195 billion-$205 billion from $180 billion-$190 billion. It also signaled that spending would increase substantially again next year.

Alphabet’s cloud remaining performance obligations rose to $514 billion from $460 billion. The company also announced plans to use third-party computing infrastructure. Lee added that earnings from other hyperscalers could point in the same direction as Alphabet’s, underscoring AI-related shortages.

Market attention is now centered on hyperscaler earnings due this week. Meta Platforms and Microsoft are scheduled to report on July 30, and Amazon.com on July 31.

Final earnings reports are also due from South Korea’s two biggest chipmakers, Samsung Electronics and SK Hynix. SK Hynix will report on July 29, followed by Samsung Electronics on July 30.

Lee Kyung-min, an analyst at Daishin Securities, said investors need to check long-term supply contracts, memory demand and profitability in the final earnings reports from Samsung Electronics and SK Hynix. In Big Tech earnings, the focus will be on whether AI capital spending is expanding and whether that is translating into actual sales growth and improved profitability.

Even if some companies post results that miss expectations, there is little reason for disappointment. Alphabet’s earnings already showed that AI demand remains solid, and that could serve as a guide for upcoming corporate results, Lee said.

Markets are also watching the outcome of the Federal Open Market Committee meeting on July 30. Investors currently expect the Fed to leave interest rates unchanged. That view follows June U.S. nonfarm payrolls that came in well below both market expectations and the prior month, as well as declines in both headline and core June consumer prices.

Lee Sang-jun said Fed Chair Kevin Warsh is unlikely to offer much guidance on the future policy path, given his usual stance. Warsh also stayed silent on rate decisions in recent congressional testimony, limiting the market impact.

Lee Kyung-min said restrictions on post-meeting press conference remarks under Warsh’s task force could keep messaging contained. If the Fed delivers no additional hawkish signal, that would support stability in bond yields and the exchange rate. In that case, the Kospi’s rebound attempt could continue, backed by foreign net buying.

Lee Su, Hankyung.com reporter 2su@hankyung.com