Recent economic data from Korea indicate that the Korean economy is experiencing weakness, as follows:

• The industrial production index declined on a monthly basis, recording a contraction of 3.6%, which is lower than the expectations (-0.4%) and the previous reading (0.7%), marking its lowest level since May 2020.
• The retail sales index decreased on a monthly basis, showing a contraction of 1.9%, which is lower than the previous reading (1.0%).
• The export index for August showed a growth of 11.4%, which is lower than the expectations (13.0%) and the previous reading (13.9%).
• The import index for August recorded a growth of 6.0%, which is lower than the expectations (6.3%) and the previous reading (10.5%).
• The GDP index on a quarterly basis for the second quarter showed a contraction of 0.2%, which is lower than the previous reading (1.3%).

Regarding the annual Consumer Price Index (CPI) in South Korea, it decreased to 2.0% in August, aligning with expectations but lower than the July reading (2.6%). This means it is exactly at the target rate set by the Bank of Korea, which stands at 2%, encouraging the central bank to consider starting to lower interest rates in the near future.

The Bank of Korea has maintained interest rates steady at 3.50% since January 2023.

The KOSPI index recorded 2,529 points today, marking its lowest level since August 8, 2024. The index has decreased by approximately 13% from its peak of 2,896 points on July 11, 2024, to today’s session. It has also declined by 4% since the beginning of the year.

From a technical perspective, the outlook for the KOSPI index appears discouraging. The main challenge is its approach to and potential breach of the level recorded on August 5, 2024, at 2,388 points. The Relative Strength Index (RSI) has recorded around 33 points, indicating negative momentum for the KOSPI. The Positive Directional Indicator (DMI+) is around 14 points compared to the Negative Directional Indicator (DMI-) which stands at approximately 40 points. The significant gap between these indicators suggests strong selling pressure on Korean stocks. Moreover, the Average Directional Index (ADX) is around 29 points, which is above the 25-point threshold, indicating a strong downward trend momentum.

Please note that this analysis is provided for informational purposes only and should not be considered as investment advice. All trading involves risk.