Kospi Eyes 7,000 Again as Investors Track US-Iran Talks

Investors are watching whether the Kospi can extend last week’s gains into the Aug. 18-21 trading week, with markets closed on Aug. 17. Brokerages expect the benchmark to make another run higher as foreign selling eases and earnings remain firm, while traders monitor ceasefire talks between the US and Iran.

NH Investment & Securities said on Aug. 16 that it expects the Kospi to move in a 6,200-7,200 range this week. The index rose for five straight sessions last week and touched 7,000 for the first time in 15 trading days. It later closed near 6,970 as some investors took profits ahead of the holiday.

Na Jeong-hwan, an analyst at NH Investment & Securities, said net buying by foreign and institutional investors has helped fuel the Kospi’s advance. After July US consumer price index data strengthened expectations for a September rate cut by the Federal Open Market Committee, foreign investors have been buying cash equities rather than futures. He added that fading doubts over earnings point to a recovery phase in which the market is repricing profits.

After ending last month’s correction, the Kospi and Kosdaq both climbed throughout last week. Market strategists say the relief rally can continue unless fresh signs emerge that could alter the interest-rate outlook, including renewed inflation pressure.

Kim Jong-min, a senior analyst at Samsung Securities, said major economic indicators confirmed slowing inflation and sharply eased concerns over additional monetary tightening. Strong earnings from Big Tech and neo-cloud companies also helped dispel doubts about the profitability of artificial intelligence.

Kim said the main lingering concern is the downward rigidity of long-term yields, with rates holding firm instead of falling. Even so, he added that unless an extreme rate shock hits the market, most of the positive factors already in place could continue to power the rally.

US Treasury yields remain a source of caution. On Aug. 14, the 10-year Treasury yield rose 5 basis points to 4.69%, while the 30-year yield gained 6 basis points to 5.27%. The dollar index, which tracks the greenback against six major currencies, fell 0.2%.

Still, expectations for a rate increase did not retreat significantly. CME FedWatch showed the federal funds futures market raised the probability that the Federal Reserve will leave rates unchanged at next month’s FOMC meeting to 67.6% from 66.1% a day earlier. The odds of a rate hike fell to 32.4% from 33.9%.

Kim said the extreme concentration in South Korea’s two leading chipmakers has started to ease, while renewed foreign net buying is spreading support across the broader market. He cautioned that expectations for shareholder returns at semiconductor companies have been priced in before any concrete plans were unveiled. Even so, he said the chances of another irrational selloff like last month’s appear limited.

In the short term, ceasefire talks between the US and Iran are a key variable. President Donald Trump said on Aug. 14 that the US would soon declare the Strait of Hormuz to be American territory, as he continued to seek effective control over the waterway through negotiations.

Iran, however, has said it will keep the strait closed, underscoring the difficulty of reaching a breakthrough. Kazem Gharibabadi, Iran’s deputy foreign minister, wrote on X that the Strait of Hormuz cannot be controlled by tweets, aircraft carriers, orders or campaign speeches. It will be closed and reopened only under Iran’s command, he wrote.

Lee Kyung-min, an analyst at Daishin Securities, said the market could face volatility this week from developments in the US-Iran talks, with no major events such as CPI data or Big Tech earnings on the calendar. For now, though, he said the risk of tensions escalating into a shock large enough to damage the market’s broader trend appears limited.

Noh Jeong-dong, Hankyung.com reporter, dong2@hankyung.com