Kospi Rises Amid U.S. and Japan Rate Hikes as '7000 Point' Recovery Looms

Kospi index surged 2.66% to close at 6894.23 on Friday, with the benchmark briefly breaking above 6900 during trading. Despite U.S. Federal Reserve raising rates by 0.25 percentage points to a range of 3.75%-4.0% and Japan's Bank of Japan (BOJ) increasing its policy rate from 1.0% to 1.25%, the market showed resilience, fueled by semiconductor stocks.

Samsung Electronics rose 3.73% and SK Hynix climbed 6.42% as Nvidia CEO Jensen Huang noted that chip sales could double next year compared to this year, boosting investor confidence in the sector. Analysts suggest a repeat of the 2022 market crash is unlikely, citing higher starting interest rates now (3.5%-3.75%) compared to 2022's 0%-0.25% and historical data showing Kospi has averaged a 9.1% rise during Fed rate-hiking cycles since 1994.

Market sentiment improved as BOJ's decision was seen as less hawkish than expected, with no strong dissent for larger rate hikes. This eased fears of yen carry trade unwinding, which had caused global market turmoil in summer 2024. The yen strengthened against the dollar to around 157 per dollar, but markets reacted positively to BOJ's measured approach.

Analysts emphasized that current corporate earnings and AI-driven growth are key factors supporting the market, unlike the 2024 downturn driven by job market shocks and recession fears. While some caution remains about oil prices and upcoming U.S. options expiry on Friday, sentiment leans toward optimism with Kospi nearing the 7000 level.