📈 KOSPI Weekly Sentiment Recap (2025.10.20–10.28)

KOSPI hits a record high, breaches the 4,000 mark.
Tariff negotiation relief + semiconductor rally + weaker USD/KRW drive momentum.
Retail investor cash balances & margin trading hit new records, signalling heavy risk‐take.
“SentimentLab” model accuracy ~57%, but shines as a behavioural thermometer rather than a perfect prediction tool.

Headlines are awash with terms like “bull market”, “4,000 countdown”, “record deposits”.
KOSPI rallying from ~3,800 to ~4,080 as domestic and foreign capital flows converge.
Individuals, foreigners and institutions all buying — a rare “three-way synchronized” inflow.
Margin debt and investor deposits at historic highs — classical signs of a late-stage rally.

① Korea-US Tariff Negotiation Relief

Reports indicate major progress on U.S. tariffs for cars/semiconductors, easing a large overhang.
Yet the U.S. still appears to insist on large annual “local investment” quotas from Korean firms—setting up a structural cost burden.② Semiconductor / AI Supply Chain Re-rating
Firms like Samsung, SK Hynix gain from HBM/AI memory demand upgrades; market consensus sees Korea as part of the global AI supply chain.③ Won Strength / FX Tailwind
USD/KRW has weakened, improving foreign investor entry economics.
But, for exporters, a stronger won means margin compression—so the benefit is lopsided.④ Domestic Policy / Liquidity Rotation
The central bank shows little urgency to cut rates; real‐estate regulation remains tight.
Liquidity appears to be rotating from property into equities — fuelling the rally.

🔹 Macro Deep Dive: Global–Domestic Link
Brief paragraph on how Korea’s rally fits into global rotations:“As U.S. indices consolidate after record highs, Korean equities have become a proxy for global AI supply chains. Korea’s outperformance relative to Japan’s TOPIX and Taiwan’s TAIEX signals a shift in Asia’s tech leadership narrative.”

Media already speaking of “overheating”, “bubble risk”, “volatility warning”.
Global risk: Federal Reserve (Fed) not committed to further easing, creating potential headwinds.
Domestic: Excess leverage and a one-directional market (everyone going long) raise systemic risk.
Corporate earnings and FX/margin pressures remain latent risks.

Over this week’s 7 trading days the SentimentLab model predicted correctly 4 times out of 7 (~57.1% accuracy).
While the model isn’t highly accurate, its strength lies in capturing market mood and transition points rather than simply “up” or “down”.
- When sentiment scores were high (>2), the market indeed rallied.
- When sentiment dropped (~1.5), the market showed signs of stress and increased volatility.
Most of its predictions were ‘up’, reflecting the prevalent market bias — which in itself is an informative indication of crowd psychology.
Together with metrics like VIX, FX and moving averages, it serves as a barometer of investment heat.

Date (2025)	VIX Close	Sentiment Score	KOSPI Volatility	Comment on Tape
Oct 20	18.23	2.13	30.69	Early stage of melt-up, controlled volatility
Oct 21	17.87	1.43	51.89	Aggressive risk-on, still orderly
Oct 22	17.30	1.00	87.86	Vol spike: intraday churn even as headlines stay bullish
Oct 23	17.30	1.12	82.93	Vol elevated but fear down → complacent dip-buying
Oct 24	16.37	1.16	92.95	Ultra-low VIX + high churn = classic euphoria
Oct 27	15.79	2.10	59.55	VIX compression; market treating upside as default
Oct 28	16.42	1.80	38.78	Slight nervous uptick, but still “we’re fine” pricing

Bull case:

Further relief in Korea-US trade talks (automotive/semiconductor tariffs) could fuel renewed upside — especially for Tech/Auto sectors.
Continued strength in global AI/semiconductor demand (especially HBM, DDR5) may deliver strong earnings surprise for major Korean suppliers.
Foreign investor flows and weaker USD could continue to bolster inflows to Korea.

Risk case:

If sentiment is already stretched, profit-taking or a disappointing data print (e.g., inflation, export weaknesses) could trigger a sharp pullback.
A stronger won beyond expectations may pressure exporters and dampen the rally.
Any hiccup in trade negotiations or surprise U.S. interest-rate hawkishness could derail momentum.

Key things to watch:

Scenario	Probability	Description
Continued rally	45%	If U.S. soft landing narrative persists and Fed remains on hold.
Short-term correction (−3~5%)	40%	Due to profit-taking and high retail leverage.
Sharp reversal (−7% or more)	15%	Triggered by unexpected U.S. hawkish signals or poor export data.

“South Korea’s exports of semiconductors jumped 25.4% year-on-year on strong demand for high-capacity memory chips.” — Reuters. reuters.com
“South Korea and U.S. strike a trade deal easing tariffs on automobiles from 25% to 15%.” — The Korea Herald. koreaherald.com +1
“Planned tariff reduction: South Korea aims to lower automotive tariffs to 15%.” — ScanX Trade. scanx.trade