KOSPI Faces 7,000 Test with Nvidia Earnings, US Treasury Yields in Focus

The South Korean stock market is bracing for volatility this week as investors await earnings from semiconductor giant Nvidia and keep a close eye on US Treasury yields. The Kospi closed at 6,912.95 on August 21 after rising 0.88 percent. Meanwhile, the Kosdaq fell by 4.63 percent to end at 801.94.

Despite concerns about higher long-term yields and the cost burden of AI investment, semiconductor profit forecasts have not been significantly damaged. Spot DRAM prices are holding at elevated levels, and memory demand tied to AI data center investment is continuing.

Large-cap shareholder returns are providing a boost to supply and demand. SK Hynix has announced plans to buy back approximately 40 trillion won worth of its own shares from August 20 to November 19. Samsung Electronics also approved a plan to implement shareholder returns estimated at around 90-110 trillion won this year.

The KOSPI's forward price-to-earnings ratio (PER) remains in the 5-times range, indicating undervaluation. However, if earnings growth is maintained and shareholder returns expand, expectations could rise that undervaluation will ease, led by large-cap stocks.