JPMorgan's Global Data Intelligence team released a report on October 30th stating that the Korea Composite Stock Price Index (KOSPI) fell by approximately 19% from October 1st to 27th. Market concerns about AI infrastructure spending and overvalued stocks have resurfaced, with institutional investor sentiment (bullish/bearish bias) and market participation both falling below their long-term averages. Historical data shows that when both indicators are below their averages, the KOSPI rises by an average of 1.8% over the next 20 trading days, higher than the long-term average of 1.5%; the probability of positive returns is 61%, also higher than the historical average of 56%. However, a low-sentiment environment is typically accompanied by higher volatility; the historical volatility over the next 10 days averages 6%, higher than the long-term average of 5%. The KOSPI rebounded by approximately 7% on October 28th, driven by corporate earnings performance, but JPMorgan strategists remain cautious, believing that the index has not yet shown clear signs of slowing its decline in the key technical support area formed between February and October, and AI and semiconductor-related trading may continue to fluctuate in the short term.
