Kospi Searches for Direction Ahead of Fed, Samsung Electronics and SK Hynix Earnings, Eyes Base-Building

South Korean stocks are poised to search for direction this week as investors digest the Federal Open Market Committee meeting and third-quarter earnings from Samsung Electronics and SK Hynix, with the market seen building a base.

NH Investment & Securities said on October 25 that it expects the Kospi to trade in a 5,100-to-6,400 range this week. The benchmark held above 5,500 on October 23 after paring losses when SK Hynix said it would stop reviewing an initial public offering for its U.S. subsidiary Solidigm.

Investor focus is on the Fed's October FOMC meeting on October 27-28. The rate decision is due at 2 p.m. on October 28, or 3 a.m. on October 29 in South Korea.

Markets had initially leaned toward another rate increase from the Fed following last month's move. That view has softened somewhat after John Williams, president of the Federal Reserve Bank of New York, said inflation remains too high and an additional rate increase by year-end could be appropriate, while stressing there is time to review the data and no need to rush after the policy action taken at the September meeting.

The probability of a 25-basis-point increase in October reflected in CME FedWatch also fell to about 50% from 70% after Williams's remarks.

Lee Kyung-min, an analyst at Daishin Securities, said the market's attention would center less on the rate decision itself than on the future path of monetary policy. If the meeting reinforces a tighter policy trajectory, it could cap any rebound in equities, he added, especially after U.S. consumer prices for September came in above expectations and higher international oil prices kept inflation pressure in place.

At home, third-quarter earnings from Samsung Electronics and SK Hynix are the key variables. SK Hynix will release results on October 28, followed by Samsung Electronics on October 29.

Samsung Electronics previously said in its preliminary third-quarter results that it posted operating profit of 107.4 trillion won. SK Hynix is also expected to deliver record earnings. Consensus compiled by the financial investment industry puts the company's third-quarter revenue at 98.2257 trillion won and operating profit at 76.964 trillion won.

Still, investors may focus more on profit guidance and additional shareholder return measures than on the earnings figures themselves. Concerns about the sustainability of AI spending have grown after credit worries tied to U.S. company CoreWeave's corporate bonds and the financial burden from Meta's expanded artificial intelligence investment came into sharper focus.

Samsung Electronics and SK Hynix have recently completed share buybacks worth about 15 trillion won and 40 trillion won, respectively. Samsung Electronics has also said it plans additional shareholder returns of as much as 110 trillion won this year.

The market is watching whether Samsung Electronics will announce additional cash dividends and more share buybacks and cancellations. Investors are also looking to see whether SK Hynix will unveil further shareholder return measures to calm concerns over a duplicate listing that surfaced during the review of a Solidigm listing.

Na Jung-hwan, an analyst at NH Investment & Securities, said SK Hynix is estimated to have more than 30 trillion won available for additional shareholder returns. A large-scale share buyback, if confirmed, could allow buying by other corporations to absorb some foreign selling and help ease the Kospi's supply-demand imbalance.

Hwang San-hae, an analyst at LS Securities, said chipmakers' earnings should help curb stock-price volatility driven by macro uncertainty. But rather than a sharp rebound in the index, he expects the market to build a base through broader participation. He also advised investors to maintain exposure to defensive areas instead of increasing allocations solely on valuation appeal.