KOSPI Stuck Below 7,000 as Warsh's Hawkish Comments Weigh on Market
The Korean stock market has been struggling to hold above 7,000 points. Despite attempts by Samsung Electronics and SK hynix to buoy the market through large-scale share buybacks, investors remain cautious due to concerns over elevated government bond yields and the profitability of artificial intelligence. The uncertainty surrounding the market was exacerbated by Federal Reserve Chair Kevin Warsh's hawkish comments at the Jackson Hole conference on August 28th.
Warsh expressed strong wariness about inflation, stating that the Fed must be confident that underlying inflation is moving towards its target clearly and quickly enough. His remarks raised the odds of a rate increase in September, with CME FedWatch pricing in a 57.5% probability of a 0.25 percentage point hike.
The market's inability to break through 7,000 points has been attributed to a decline in demand from both retail and foreign investors. Between August 20th and 28th, foreign investors sold a net $5.2 billion worth of shares, while retail investors sold a net $1.9 billion.
Analysts point out that the market will be closely watching upcoming events such as the FOMC meeting on September 15-16, which will release the dot plot and influence interest rates. The August employment data due on September 4th and the August consumer price index due on September 11th are also expected to impact share prices.