KOSPI Rebounds 1.37%: The Real Variable Is Tomorrow's Pre-Dawn FOMC

Today's mood

KOSPI rebounded after a day’s break. Half a day ahead of the U.S. Federal Open Market Committee (FOMC) decision, KOSPI closed up 1.37% at 6,717.97 and KOSDAQ rose 0.44% to 815.98.

Large-cap chipmakers led the rebound. Samsung Electro-Mechanics rose 2.93%, SK Hynix 2.34%, and Samsung Electronics 0.8%. Robotics, defense and autos, which had surged or held up yesterday, mostly took a breather today.

Yesterday's checkpoint, checked today

Yesterday we said we’d check three things next session — whether robotics names (Wonik Holdings, SPG) kept rallying, whether chip-equipment selling (Jusung Engineering) eased, and whether Treasury yields and the won moved further ahead of the FOMC’s second day.

It’s a mixed scorecard. Robotics names took a breather after one day — among the stocks we follow, Rainbow Robotics fell 3.08% (Wonik Holdings and SPG dropped out of today’s top trading-value names, so we have no directly comparable quote for them today). Chip-equipment selling eased as expected: Jusung Engineering rose 1.47% today, clawing back part of yesterday’s 4.2% drop. Yields and the won moved further as we expected — the U.S. 10-year yield climbed further to 5.0%, and the won weakened an additional 0.14%.

Large-cap chipmakers pushed KOSPI higher

A large share of today’s gain came from three chip names. Samsung Electro-Mechanics rose 2.93% to 1,369,000 won, SK Hynix 2.34% to 1,752,000 won, and Samsung Electronics 0.8% to 252,500 won.

Wall Street fell for a second straight session overnight (Dow -0.63%, S&P 500 -0.45%, Nasdaq -0.78%). Still, chip names that had sold off the day before — Nvidia, AMD, Qualcomm — drew bargain hunters (Infostock Daily), and that tone carried into Korea’s chip large-caps today.

Wall Street houses are broadly constructive on Korean chipmakers too. Goldman Sachs raised its 12-month target on Samsung Electronics from 480,000 won to 490,000 won last month and kept its buy rating, citing HBM revenue up more than 80% quarter over quarter and DRAM operating margins nearing 80% (SBS Biz).

Photo: STMicroelectronics (original work) Una tantum (screenshot) / Wikimedia Commons (BY 3.0)

First hike in 3 years 2 months, decided before dawn

Separate from today’s rebound, the bigger variable is still ahead. The Fed’s two-day September FOMC meeting runs September 15-16 (U.S. time), with the decision landing at 3 a.m. Korea time on the 17th.

CME FedWatch puts the odds of a 25bp hike above 92% (Edaily, Newspim, Segye Ilbo). If it happens, the policy rate moves from 3.50-3.75% to 3.75-4.00% — the first hike since July 2023, three years and two months ago. A Reuters poll of 101 economists found 86 (85%) now expect a hike, a full reversal from a week earlier (Edaily).

Fed Chair Kevin Warsh has to reconcile hawks (Cook, Barr) and more cautious voices (Waller, Williams). The July meeting split 9-3 for holding versus hiking (Global Economic), so another divided vote is possible. This meeting will also unveil a new dot plot with projections out to 2029 for the first time.

Korean rates climbed too

This isn’t just a U.S. story. Per the Bank of Korea’s ECOS data, the 10-year Treasury bond yield stood at 4.6% as of September 15, up 0.064 percentage points over ten days, while the 2-year rose to 4.005%, up 0.073 points. The 91-day CD rate also climbed to 3.21%.

When the Fed hikes, the Bank of Korea has less room to maneuver if it wants to defend the won. Today’s additional 0.14% won weakening isn’t unrelated to that backdrop.

On PER, Korean chipmakers already look cheap

Beginner’s note: PER (price-to-earnings ratio) is share price divided by expected earnings — the lower it is, the cheaper the stock looks relative to profit. Here we use the forward 12-month estimate (FWD PER).

Samsung Electronics and SK Hynix, today’s chip leaders, trade at 12-month forward PERs of 3.6x and 3.7x respectively (story_engines valuation engine, Yahoo Finance consensus). Both sit more than 80% below their average analyst target price — Samsung 87.7%, SK Hynix 82.1%. Both names also trade 32.3% and 41.1% under their 52-week highs, which says as much about how high the consensus targets are as it does about the stocks.

Samsung Electro-Mechanics, the other chip name that drove today’s gain, looks different: its 12-month forward PER is 32.7x, far above the two memory giants.

Today's lead stock: Taihan Fiberoptics

Today’s top name by trading value was Taihan Fiberoptics, up 12.36% to 16,090 won — the single biggest mover on KOSPI.

It’s hard to pin down a specific catalyst for today alone. But Taihan Fiberoptics has repeatedly hit 52-week highs this year on a string of AI-data-center fiber-cable supply deals with U.S. Big Tech — a roughly 5.4-billion-won first batch of ultra-high-density fiber cable in February, and a Verizon-Corning fiber deal earlier this month that lifted the whole fiber-optics group (Global Economic). Today’s move looks like an extension of that.

Wonik IPS, grouped in the same chip-equipment theme, also rose 6.53%. Its catalyst isn’t fiber optics, though — it’s chip equipment, covered next.

Chip-equipment names clawed back yesterday's drop

Jusung Engineering rose 1.47% today to 200,000 won, clawing back part of yesterday’s 4.2% drop. Wonik IPS rebounded harder, up 6.53% to 117,500 won.

Wonik IPS is getting credit for expectations of new fab setups and process-conversion investment resuming at large domestic fabs (Daily Invest). As a supplier of front-end deposition equipment, it’s seen as a direct beneficiary of the equipment-order cycle, though there’s typically a six-month-to-one-year lag between orders and actual revenue recognition, so today’s price reaction won’t translate straight into next quarter’s earnings.

Only Doosan's holding company gained

There was a clear split inside the Doosan group. Holding company Doosan rose 6.31% to 1,382,000 won, while subsidiary Doosan Enerbility fell 3.23% to 84,000 won.

That gap is hard to explain with a single catalyst from today alone. Doosan has been on a steady uptrend this month on earnings hopes at its chip and battery-related units and revaluation of its robotics and nuclear businesses, and today’s gain looks like more of the same. Doosan Enerbility itself, however, carries the market’s nuclear-order expectations and simply followed today’s broader pullback outside chips.

Robotics and defense took a breather

Outside chips, most sectors failed to keep pace with KOSPI’s gain. Rainbow Robotics, which surged yesterday, fell 3.08%, and defense/shipbuilding names such as Hanwha Aerospace (-1.22%) and HD Hyundai Heavy Industries (-2.21%) also slipped. Kakao (-2.88%) and Hyundai Motor (-2.03%) sat out the rally as well.

This reads as a day when money concentrated in large-cap chips left other sectors relatively sidelined. We don’t see a catalyst large enough to explain why these names in particular fell as much as they did, so it’s too early to read this as more than rotation.

KOSDAQ and the won

KOSDAQ rose a milder 0.44% to 815.98 versus KOSPI’s gain. The won weakened 0.14% to 1,365.6 per dollar, per Hana Bank’s 4:39 p.m. notice rate.

Rising Treasury yields have recently come with a stronger dollar (Newspim), so the won could move further depending on tomorrow’s pre-dawn FOMC outcome.

What we're watching next session

First and foremost is the U.S. September FOMC decision, due at 3 a.m. Korea time on the 17th. Markets are pricing a 25bp hike at better than 92% odds. The first thing to check is whether the hike actually happens, and how many further hikes the new dot plot — extending projections out to 2029 for the first time — signals.

Second is whether the large-cap chipmakers that led today’s rebound keep rising regardless of the FOMC outcome. We’ll watch whether Samsung Electronics’ and SK Hynix’s already-low PERs keep acting as a cushion next session the way they did today.

Third is whether today’s individual surge names — Taihan Fiberoptics, Wonik IPS — were a one-day flow event or continue the pattern that’s repeated through the month.

Last is the won and Treasury yields. A hawkish FOMC outcome could push the won weaker still, which could in turn affect foreign investor flows.

Worth a closer look today

A rate hike at this FOMC wasn’t the market’s mainstream call until recently. August core CPI rose 0.3% month over month, keeping price pressure alive, and oil above $100 a barrel pushed inflation expectations higher still (Edaily). As a result, CME FedWatch’s odds of a 25bp hike topped 92%, and a Reuters poll of 101 economists found 86 (85%) now expect a hike — a complete reversal of the consensus from a week earlier (Edaily).

The U.S. 10-year Treasury yield climbed as high as 5.041% along the way, a 19-year high (Newspim). Standard Chartered CIO Jonathan Liang said the 10-year is “highly sensitive to inflation expectations, and that relationship will persist as long as inflation stays above target,” while Interactive Brokers’ chief strategist Steve Sosnick said “the usual link between rising oil prices and inflation expectations is far stronger than normal right now because of the geopolitical backdrop” (Newspim).

For Kevin Warsh, newly installed as Fed chair this year, a first rate hike is also a test. Beyond the optics of a chair installed by President Trump raising rates early in his term, July’s meeting already split 9-3 for holding versus hiking (Segye Ilbo). Governor Waller and New York Fed President Williams lean cautious, while Governor Cook and Vice Chair Barr are open to hiking, so another split vote is possible. Rate futures are pricing as many as four more hikes by next July (Edaily), which makes the new dot plot due at this meeting the key signal for where markets go from here.

Sources

• Infostock Daily [0916 Open Check] U.S. stocks: chip names rebound on bargain hunting
• Edaily Wall Street, once betting on a hold, has turned toward a rate hike
• Newspim U.S. Treasury yield breaks the 'cursed 5%' — 10-year at a 19-year high
• Global Economic Fed likely to hike 25bp — Chair Warsh's internal balancing act 'put to the test'
• Segye Ilbo Bets on a Fed hike near 90% — will Warsh resist Trump's push to cut?
• SBS Biz Goldman Sachs raises Samsung Electronics target from 480,000 to 490,000 won
• Global Economic [Spotlight] Fiber-optics names surge on Verizon-Corning fiber deal
• Korea Economic Daily Taihan Fiberoptics hits 52-week high on AI data-center demand
• Daily Invest [KOSDAQ close-up] Wonik IPS: will customer conversion investment lift equipment supply and the stock?