KOSPI Defends Despite Steep Fall of Samsung, SK Hynix

While Nvidia rose in the US market, memory semiconductor-related stocks such as Micron and SanDisk showed weakness. This is because AI benefits were dispersed to network-related stocks or custom ASIC (Application-Specific Integrated Circuit) companies. Beyond AI semiconductors directly linked to Nvidia, companies related to infrastructure necessary for AI data processing and communication are gaining attention.

Kioxia's announcement of a large-scale long-term investment plan until 2032 negatively impacted investment sentiment in both domestic and international memory semiconductor markets. This announcement also contributed to the weakness of related companies such as US-based SanDisk. It was perceived as news that could heighten concerns about oversupply in the long term.

Foreign investors sold approximately 2 trillion Korean won in spot assets in the domestic stock market but maintained a net-buying stance in the futures market. This is interpreted as an intention to avoid both sharp rises and steep falls in the index. This appears to be a factor contributing to the KOSPI index moving within a range between 6,400 and 7,100 points since July.

Despite Samsung Electronics and SK Hynix each falling more than 3%, the KOSPI index recorded a relatively modest decline of around 1.5%, showing resilience. Given the significant drop in these two stocks, which account for over 50% of market capitalization, the index's decline was less than expected. Considering that in the past, declines in these two stocks had a greater impact on the overall index, the current market appears to have a certain degree of defensive capability.

This phenomenon reflects the characteristics of a rotational market where the number of rising stocks exceeded the index's movement. Stocks in sectors other than large-cap semiconductor companies showed solid performance, defending against an overall market decline. Investment sentiment is not concentrated solely on specific large-cap stocks but is diversifying across various issues.

The fact that the overall market impact was mitigated despite declines in high market capitalization stocks is attributed to the diversification of investor portfolios and the inflow of buying interest into other sectors based on expectations of economic recovery. This can also be interpreted as a positive sign for market health.

Rumors have emerged that the United States is considering imposing high-intensity tariffs on semiconductors and finished products. This move could be a means of pressure to accelerate local factory construction in the US. Analysis suggests it could be used as a political negotiation tool to encourage semiconductor companies to expand their production facilities in the United States.

However, some views suggest that a large-scale tariff imposition is unlikely given the current semiconductor supply shortage. The US government would have to consider the ripple effects on its own industries. Therefore, the prevailing opinion is that these tariff rumors are more about increasing negotiation leverage than actual implementation.

The semiconductor industry is central to the global supply chain and has a significant impact on the US economy. Thus, strong policies such as tariff imposition must be approached cautiously, and the US government's ultimate goal appears to be strengthening domestic production capacity and stabilizing the supply chain.

Kioxia and SanDisk's announcement of a large-scale joint factory investment until 2032 dampened short-term investment sentiment. Market participants reacted sensitively as concerns about oversupply grew from a long-term perspective. This highlights the market's characteristic of focusing more on the possibility of future supply volume increases than on next year's earnings outlook.

Particularly in the NAND flash market, there is a perception that it is more vulnerable to industry fluctuations than DRAM. Therefore, large-scale expansion plans can be a burden for investors. The market is showing caution about future expansion plans that conflict with current expectations of industry recovery.

Foreign investors sold 2 trillion won in spot assets in the domestic stock market, but at the end of the session, they switched to futures buying, showing a move to defend against a decline in the index. This pattern of foreign supply and demand is linked to the continuously rising lows of the KOSPI index. The market is analyzed to be in the process of forming a flag pattern for an index rally.

Buying in the futures market reflects short-term index defense and expectations of an upturn. Even if foreign investors unload some spot assets, their intention to manage the overall direction of the index through the futures market can be seen. This is interpreted as a strategy to maintain the overall upward trend while utilizing market volatility.

Despite the sluggish semiconductor sector, stocks in other industries such as cosmetics, secondary batteries, and bio showed strength. Cosmetics-related stocks like Kolmar Korea and Sillajen recorded new highs, attracting market attention. Sillajen maintained a steady upward trend amidst investment attraction and major shareholder sale issues.

Secondary battery-related stocks such as Samsung SDI and POSCO Future M showed signs of rebounding from their lows, indicating an improvement in investor sentiment. In the bio sector, some stocks like Alteogen appeared to be forming support levels, gathering energy for further gains.

As market interest expanded to various sectors, the characteristic of a sector rotation market, where demand concentrated on specific large-cap stocks diversified, became prominent. This can contribute to improving overall market health and providing new investment opportunities.

Advice was given to focus on stocks poised for change rather than those that have already risen significantly when discovering investment ideas. Citing past examples where communication equipment companies like KMW and RFHIC rose on US entry issues but later saw their stock prices fall again, it emphasized caution regarding profit-taking on stocks that have already climbed.

The explanation suggested that a strategy of proactively identifying stocks with potential that have not yet seen light, and entering at the point of an upward transition, is effective. This requires investors to thoroughly analyze a company's intrinsic value and future growth potential rather than simply chasing rallies.

Kioxia's 5 trillion yen investment plan for NAND-related facilities has been confirmed, significantly exceeding the previously reported 1 trillion yen. Concerns are raised that excessive supply of NAND flash, which is more volatile than DRAM, could burden the market.

However, some analysis suggests that an immediate crisis of oversupply is unlikely, as Kioxia's investment plan spans long-term periods like 2029, 2030, and 2031. Furthermore, the DRAM market is more than three times larger than the NAND market, so the impact of large-scale NAND investment on the overall semiconductor market may differ.

Micron's CEO emphasized that the decline in semiconductor company profits would not exceed 20%, unlike in the past. He expressed that even if profits fall, the extent would be limited, highlighting a floor. However, the market tends to equate the current situation with past instances where profits plummeted by over 50%, estimating that current profit multiples could actually be 8x or 9x.

The most significant difference between the dot-com bubble era and the current market is that the 'bondholder view' dominates the market. During the dot-com bubble, there was a lot of speculative capital inflow, but now, the bond market's perspective dictates the overall market trend. Bondholders continuously test the market and are highly sensitive to interest rate volatility.

This bondholder view reflects the market's high interest in corporate financial health and debt repayment capacity. In a rising interest rate environment, corporate financing costs increase, and default risks can rise, so movements in the bond market can significantly impact the stock market.

Samsung Biologics decided on a rights offering for shareholders for the first time in 4 years and 7 months, aiming to raise 3 trillion won. These funds are primarily intended for acquiring a Swiss company called PolyPeptide. This acquisition is analyzed as a strategic investment by Samsung Biologics to secure lacking technology and generate greater profits.

Generally, a rights offering can be a short-term negative factor for stock prices due to dilution concerns. However, this rights offering can be positively interpreted as a technology investment to secure future growth engines, beyond mere fundraising. It is expected to contribute to strengthening the company's long-term competitiveness.

As the US Treasury pursues a short-term debt exchange (buyback) strategy, the importance of securing demand for short-term Treasury bills (T-Bills) has been highlighted. In this process, stablecoin legislation could serve as a potential link. If stablecoin companies invest their holdings in T-Bills, they could contribute to meeting the US Treasury's demand for T-Bills.

The stablecoin market is growing rapidly, and if their vast dollar holdings flow into the T-Bill market, it could have a significant ripple effect. Therefore, one perspective suggests that the US government may take a multifaceted approach, considering stablecoin regulation and T-Bill market stabilization simultaneously.

Expectations are that the Fed Chair will find it difficult to provide any special policy hints, such as interest rate cuts, at the Jackson Hole meeting. In the current economic environment, a cautious approach is anticipated, likely keeping options open for future policy directions rather than giving clear guidance on interest rate policy. Market experts believe there is a higher chance of interim explanations, such as a task force progress report, rather than the Fed Chair's speech.

While past Jackson Hole meetings have been crucial for gauging the Fed's future monetary policy direction, this time, expectations are high that it will merely reaffirm existing stances without special comments. This is interpreted as reflecting a desire to minimize market uncertainty and avoid sharp volatility.

Following Samsung Biologics' rights offering announcement, the market reacted with surprise at the unexpected decision, as it is almost the first large-scale rights offering since its listing. Samsung Biologics will hold an online briefing on September 3 to explain the purpose and background of the rights offering in detail.

The primary purpose of the rights offering is to raise funds for M&A and secure cash. This appears to be a strategic investment aimed at strengthening the company's technological capabilities and securing future growth engines, such as the acquisition of Swiss PolyPeptide. Market experts expect this briefing to address investors' questions regarding the rights offering.