KOSPI Opens Higher on Bargain Hunting in Chip Stocks; US Markets Fall

South Korea's KOSPI index opened higher on Friday, with semiconductor giants attracting bargain hunters after recent sharp declines. The KOSPI rose 1.09% to 6,365.07 in early trading, while the tech-heavy KOSDAQ also saw gains, climbing 0.74% to 807.62.

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The domestic stock market is expected to attempt a rebound, driven by bargain hunting due to the recent sharp decline, despite uncertainties surrounding the Strait of Hormuz and concerns about US employment data in July.

This rebound follows a downturn in the US market, where the Dow Jones Industrial Average fell 0.85%, the S&P 500 dropped 0.18%, and the Nasdaq Composite slipped 0.06%. The decline in US stocks was attributed to rising international oil prices, market interest rates, and weakness in semiconductor shares. Notably, some US semiconductor firms like SanDisk and Western Digital saw significant drops, though the Philadelphia Semiconductor Index managed a slight gain.

Despite the volatility, global investment banks remain largely optimistic about the KOSPI's prospects. Goldman Sachs reiterated its 12-month target of 12,000, arguing that the recent sell-off overstates the market's fundamentals. The bank anticipates a longer and stronger memory chip cycle due to increased computing demand and potential supply shortages through 2030.

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The recent sharp decline in the KOSPI is excessive and does not properly reflect the market's fundamentals.

Conversely, some domestic South Korean securities firms have lowered their KOSPI targets. For instance, Daishin Securities reduced its year-end target from 11,500 to 9,300, and Shinhan Investment Securities adjusted its second-half target from 11,000 to 8,800. These firms acknowledge that while the recent decline may be excessive, a full market recovery will take time.

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The memory cycle is expected to be longer and stronger than in the past.

Meanwhile, alternative assets like gold and Bitcoin have shown resilience. Gold prices have surged over 7% recently, trading around $4,200, and Bitcoin is holding steady above $64,000, suggesting a potential rotation into these assets amidst market uncertainty.

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Leverage liquidation has passed the halfway point, and corporate earnings and the AI semiconductor industry's recovery are expected to lead the market going forward.