Samsung Electronics' Margin Loans Soar 10x, Why?

Samsung Electronics' stock price surged approximately fourfold from around 60,000 won last year to 250,000 won currently, but margin loans increased more than tenfold during the same period.

Such an increase in margin loans, far exceeding the stock price rise, acts as a cause of increased market volatility. The Korean market's volatility index has fallen from the 80s to the 40s in the past, but it remains high, and a decrease in volatility is expected to be a process of the market finding its fundamentals.

The growth trend in semiconductor profits acts as a major driving force attracting market liquidity to the stock market. In particular, Samsung Electronics and Hynix have presented profit targets of 300 to 400 trillion won for next year and the year after, which is an overwhelming operating profit scale that no other company in the world has achieved.

Samsung Electronics' estimated operating profit is expected to surpass Saudi Aramco and Nvidia. As liquidity concentrates on this specific semiconductor sector, funds are flocking to leveraged ETFs, causing a supply-demand imbalance.

This phenomenon shows that the strong performance momentum of semiconductor companies is driving the entire market.

Due to structural factors such as U.S. AI investment (Capex), the possibility of interest rate declines is low.

Jerome Powell, Chairman of the Federal Reserve, has not asserted that an interest rate hike cycle has begun, but despite robust employment, inflation has still not reached the target of 2%.

Core CPI and PCE remain at 2.4-2.5%, which is still above the Fed's target of 2%.

If the Iran war ends, there is a high possibility that oil prices and interest rates will drop sharply. This could significantly impact the U.S. Federal Reserve's (Fed) interest rate hike policy.

Recently, Fed officials' statements regarding interest rate hikes have unanimously shown a cautious stance, and the Bank of Japan (BOJ) also maintains a careful position considering economic growth and prices.

Analysis suggests that even if interest rate hikes are necessary, they are likely to be implemented quarterly over time.

Foreign investor inflow is observed, and expectations for the third-quarter earnings season are growing.

It is necessary to pay attention to sectors related to AI data centers, such as power, memory, HBM, and substrates. The convergence of moving averages indicates a strong market directional change, and the issue of increasing data center capacity in the semiconductor field is expected to form a new leading sector.

Data center power consumption is projected to increase to 36 gigawatt-hours (GBW) by 2032, which will be a key driver for the growth of related industries.

China's renunciation of Iran's nuclear program and its mediating role are expected to be key variables in stabilizing oil supply and demand. This, connected to the outcome of the US-China summit, could reduce market volatility.

If the risk of an Iran war eases before or after the midterm elections, oil prices could stabilize at $70-80, leading to a front-loaded market effect and a stronger-than-expected rally. The current KOSPI is judged to be in a sideways trend, not a downtrend.

Korean pharmaceutical and bio companies primarily rely on U.S. big pharma for funding, making them highly sensitive to U.S. interest rate trends. The U.S. interest rate hikes led to a depreciation of the won, causing volatility.

The current won/dollar exchange rate of 1,380 is considered a normalization process of the market, not a temporary phenomenon.

Separately, Samsung Electronics and Hynix effectively defended their stock prices through share buybacks.

There is also a possibility of individual selling due to the capital gains tax for major shareholders. Samsung Electronics is expected to announce its shareholder return policy and special dividend in October, and foreign investors are likely to increase their holdings in Samsung Electronics and Hynix over the long term.

It is analyzed that earnings momentum is more important than share buybacks themselves, and an upward trend based on solid corporate earnings is not a cause for concern.

Despite exchange rate volatility, Korean export companies are maintaining overwhelming earnings growth. The shipbuilding, automotive, and semiconductor industries are expected to show strong results in the third quarter, with some companies potentially outperforming consensus.

The current exchange rate of 1,380 won is analyzed to be a sufficient level for export companies to defend their earnings. However, individual investors need to be more careful with leverage management.

The debate over slowing down AI development was initially dismissed as a joke, but it is being revisited recently as security vulnerability issues, such as the Hugging Face hacking incident, have come to light. This hacking case, which occurred at a company Nvidia intended to acquire, emphasizes the importance of security in the AI developer community space.

While the argument for slowing down AI development could lead to a decrease in demand, it is expected to be short-term noise, and AI growth will continue.

Key figures such as Elon Musk and Sam Altman also participated, but their inconsistent actions, such as developing their own new models, raise questions about the effectiveness of regulation.

Analysis suggests that it will be difficult to achieve international consensus and ensure the effectiveness of AI regulation, as Chinese companies are unlikely to participate in slowing down AI development.

The semiconductor sector has already entered the period for a second rally. Strong performance is expected in the third and fourth quarters, but the most important market is next year.

Samsung Electronics and Hynix are discussing next year's supply volumes with clients starting in October, and demand for increased volumes is expected due to the surge in AI demand from big tech companies like Google and Microsoft.

Samsung Electronics' and Hynix's monthly CAPA are approximately 710,000 and 580,000 wafers, respectively, and Apple also needs to secure memory for its own AI model adoption.

AI data centers have reached a critical point where expansion is essential, regardless of immediate performance, and this aligns with the growth of the ESS (Energy Storage System) sector. Currently, market capital flows are concentrated on the core link of AI data centers.

Ultimately, investment opportunities are expected to be concentrated in infrastructure and power grid sectors related to AI data centers.

The market capitalization of Samsung Electronics and Hynix shows an excessively large gap with the top 3 companies, intensifying the concentration on specific sectors.

This concentration affects monetary policy and overall market volatility, forming a peculiar supply and demand structure that makes it difficult to catch up with the market using past investment methods.

Investors often find it difficult to stick to the principle of buying in fear and selling when prices surge, frequently asking about selling during declines or chasing purchases during rallies.

In such situations, a patient attitude is always important, and an investment strategy that doesn't react emotionally to short-term market volatility is necessary.