South Korea's benchmark KOSPI index has rebounded this month, but its ability to continue climbing hinges on several critical variables: shareholder return plans from Samsung Electronics and SK Hynix, Nvidia's upcoming earnings report, and the trajectory of U.S. interest rates.

According to an analysis released on the 24th by Hana Securities, the KOSPI must clear three specific hurdles to sustain its upward momentum.

Hana Securities projects that after July's sharp decline, the KOSPI will follow a "square root" shaped recovery pattern. The index has already rebounded 31.4% from its August low. While Samsung Electronics' massive cash return program is expected to support the market's floor, Nvidia's high earnings expectations and the risk of volatility in U.S. long-term interest rates are likely to cap further upside.

First Hurdle: Shareholder Returns from Samsung Electronics and SK Hynix

Hana Securities believes Samsung Electronics' shareholder return policy will serve as a key support factor for the KOSPI. The company has announced a shareholder return program totaling 90 trillion to 110 trillion Korean won for this year.

This figure is approximately five times the previous historical high of 20.3 trillion won recorded in 2020. In the third quarter, the company will distribute approximately 30 trillion won in cash dividends (including regular dividends). The remaining 60 trillion to 80 trillion won, covering additional dividends and treasury stock arrangements, will be finalized by January 2027.

However, analysts note that the actual positive impact of the shareholder return policy on the stock price may take time to materialize. The separately approved 15 trillion won treasury stock buyback by Samsung Electronics is intended for equity incentives for executives and employees, and will not result in a reduction of outstanding shares.

Hana Securities researcher Kim Doo-yeon explained: "The total scale of Samsung Electronics' shareholder returns is very substantial, but there remains uncertainty about when the reduction in outstanding shares will actually occur."

SK Hynix is moving faster than Samsung Electronics in executing its buyback. From the 20th of this month to November 19th, SK Hynix will spend 40 trillion won to repurchase approximately 24.07 million shares, all of which will be cancelled, representing about 3.3% of its issued shares.

Hana Securities believes that SK Hynix holds a leading position in both the scale of shareholder returns and the speed of execution.

Foreign investor supply and demand dynamics are also a variable. As of the end of the second quarter, foreign investors held 46% of Samsung Electronics' common shares. The recent strengthening of the Korean won to 1,380 per U.S. dollar, its strongest level in 11 months, is a favorable factor for foreign capital inflows.

However, Hana Securities noted that since Samsung Electronics' shareholder return plan was announced after the market close on the 21st, it's not possible to directly gauge foreign investor sentiment based solely on the stock's post-announcement performance. The real market test will come early next week. At 2:45 PM that afternoon, Samsung Electronics fell 8.88% from the previous trading day as the shareholder return plan fell short of market expectations.

Second Hurdle: Nvidia's Earnings Report

Nvidia is scheduled to release its second-quarter results on the 27th (Korean time). Market expectations put revenue at $91 billion, slightly below the previous consensus of $91.9 billion. Gross margin is expected to be around 75%, and the market anticipates third-quarter revenue to reach approximately $103 billion.

Researcher Kim Doo-yeon stated: "Relying solely on earnings beating market expectations is no longer enough to drive further gains in Korea's semiconductor sector. For Nvidia's earnings to support further advances in Korean semiconductors, beyond the financial results, the market needs to see clear information regarding HBM4 capacity expansion and supply agreements."

Third Hurdle: U.S. Interest Rates

The Jackson Hole Global Central Bank Symposium will be held from the 27th to the 29th of this month. This will be the first Jackson Hole meeting since Kevin Warsh took office as Federal Reserve Chair. Market attention is focused on whether the meeting will signal new logic for further rate cuts. Last month, the Fed held its benchmark interest rate steady in the 3.50%-3.75% range.

Brokerage analysis suggests that even if the Jackson Hole meeting offers new rationale for rate cuts, the Fed is unlikely to directly engage in Treasury bond purchases. Instead, it will likely rely on financial innovation and private capital flows.

Stablecoins are a typical example. Stablecoin issuers must hold the U.S. dollars they receive as reserve assets, and a significant portion of these reserves is invested in short-term U.S. Treasuries.

However, an increase of $1 trillion in stablecoin supply does not equate to an additional $1 trillion injected into the market. If $1 trillion in bank deposits is converted into stablecoins, it essentially represents a shift of funds from the banking system to the stablecoin ecosystem.

Based on this analysis, the benefits of rate cuts are likely to have a greater impact on short-term interest rates rather than long-term rates. There is also uncertainty about whether the U.S. Treasury's bond buyback operations can persistently lower long-term yields.

The U.S. Treasury raised the per-auction buyback cap for 10-30 year bonds from $2 billion to at least $4 billion. Although the 30-year Treasury yield briefly fell by about 10 basis points during intraday trading, it subsequently rebounded sharply.

Kim Doo-yeon commented: "U.S. government debt has surpassed $40 trillion. A buyback program of only tens of billions of dollars cannot resolve the fundamental fiscal problem. Buybacks help improve market liquidity in Treasury trading, but they are not a tool for solving fiscal issues."

He offered investment advice: Focus on large-cap stocks that are seeing a return of foreign capital inflows, semiconductor companies that secure HBM4 mass-production supply orders, and companies whose shareholder returns are genuinely materializing. "Cash builds the market floor, earnings hold the bottom; and interest rates ultimately determine the ceiling for the market's upside."