Bank of Korea: Semiconductor strength is expected to ease downward pressure on stock prices

The Bank of Korea said that the strong earnings of semiconductor companies could be a factor that eases downward pressure on the domestic stock market. In its business report submitted to the National Assembly on the 29th, the BOK explained that although the KOSPI has recently undergone a correction due to concerns over a slowdown in AI investment and net selling by foreign investors, the solid fundamentals of the semiconductor sector, including Samsung Electronics and SK Hynix, could support the market. The BOK said it believes the stock market may continue to react sensitively to external variables such as the outlook for the AI industry and shifts in monetary policy in major economies. However, it assessed that the global semiconductor industry is likely to maintain an expansionary trend for the time being, supported by growing AI adoption and infrastructure investment. Regarding monetary policy, the BOK maintained its stance that further rate hikes are needed even after raising the benchmark interest rate from 2.50% to 2.75%. It said that, as inflation is expected to remain above the target level for a considerable period, the timing and pace of future hikes will be determined while taking inflation, the economy, and financial stability into account. On the housing market and household debt, it added that upward pressure remains, but the government's real estate measures and tighter loan management could ease some of the risks.