KOSPI: Prepare for a Volatile Market

The current market calls for preparation for expanded volatility rather than a clear directional trend. In particular, the inflation data scheduled for release on September 10–11 needs to be checked, as it adds to the market's uncertainty. The US 10-year Treasury yield stalling in the upper 4% range is also cited as a factor amplifying volatility.

With expectations rising around OpenAI's Astra model release and the spread of AI agents, demand is increasing for semiconductor component and materials companies such as Samsung Electronics and SK Hynix. Rising chip prices and solid export data support this trend. Until the US midterm elections on November 3, geopolitical risks are expected to remain subdued, which should work positively for the market.

There is talk that the much-anticipated large-scale IPO of Anthropic could be delayed. This is a positive factor that eases supply-demand pressure in the market. Avoiding the event where funds are withdrawn from existing stocks and moved into newly listed ones could prevent a contraction in market liquidity, according to analysts.

The US-Iran conflict that began in March has lasted longer than expected. Such geopolitical risk keeps the discount rate, or required return, high when valuing risk assets such as stocks. This can act as pressure lowering the value of risk assets.

Stock prices rise most effectively when earnings improvement and multiple expansion occur together, but in a high-interest-rate environment it is hard to raise multiples. As a result, a structure forms in which earnings growth becomes the only driver of stock price gains.

There is a close correlation between the Federal Reserve's policy rate cuts and market multiple expansion. With the Fed currently holding rates steady and further hikes still possible, this uncertainty makes valuation expansion difficult.

The producer price index (PPI) is scheduled for release at 9:30 p.m. on September 10. PPI acts as a leading indicator that affects the consumer price index (CPI) with a time lag. Ahead of the inflation data release, wariness is rising in the market, and overall index gains tend to narrow.

Under rebalancing rules, if the weight of a specific stock exceeds the appropriate level of 20%, the excess weight must be sold. Supply-demand events on the day of rebalancing can create short-term caution in the market.

This strategy limits part of the gains from rising stock prices, but generates dividend funds through option premiums. Compared with index-tracking ETFs, it offers the advantage of potentially achieving excess returns in a sideways market.