"Semiconductors Could Be Halved" — Lee Seung-jo Lays Out Year-End Market Outlook and Investment Strategy

Lee Seung-jo, CEO of Mugeuk Seonsaeng, said that for semiconductor stocks he sees 7,000 to 7,200 at best. He expects the timing of semiconductor stocks to be determined by when Chuangxin Memory is halved. He also analyzed that Chinese old funds are creating this flow, and that the fear surrounding a Chinese company listed on July 27 will have a bigger impact on Korea's semiconductor market.

He added that stocks such as Palantir and Oracle are showing a similar pattern of surging from the bottom, so there is a need to pay attention to these sectors.

Lee Seung-jo said the TIGER semiconductor ETF index fell below its late-March level of 27,000 by late July. He explained this contrasts with the composite stock index, which rose from 5,040 to 5,200 by late July. Hanmi Semiconductor, by contrast, was at 240,000 won in late March when the index was 5,000, fell to 150,000 won, and is now rising above that earlier level, which is why he recommends buying it. He added that Hanmi Semiconductor may close that gap.

Lee Seung-jo expects the Korean market to stay in a range for two to three months. He said, "At best I see 7,000 to 7,200," and predicted there will be several shake-outs within that band. In the worst case, the 6,000 level could also break, and he analyzed that rotation among stocks will continue during this shake-out process. He diagnosed that large caps such as Samsung Electronics, moving about 20% between lows and highs, could further worsen investor sentiment. He explained that for investors stuck with losing positions, the pattern of recovering and then falling again will be the greatest psychological blow, and this could last another two to three months.

Lee Seung-jo judged that the market bottom for this year has already been set at 5,200. However, for the 7,000 to 7,200 range to become a support line rather than resistance, strong upward momentum is needed, and he analyzed that such momentum is not yet visible. He expects the direction of the market to be decided once the September summit between Trump and Xi clears up the Middle East Strait of Hormuz energy issue, namely the direction of oil prices and US long-term interest rate strategy.

He explained that he sets 300 core target stocks on his monitor and checks in real time which ones are seeing inflows of 5 to 7% or more. He noted that such signs have recently appeared in quantum computing-related stocks and robot stocks, and added that by finding these stocks and trading them short-term, one can earn 30 to 50% returns in three to five days.

Lee Seung-jo analyzed that pessimism pervades the current market, and that on the KOSPI, large-cap stocks tend not to rise much and remain pressed down. On the KOSDAQ, by contrast, some bio stocks such as Alteogen often climb into the top market caps and surge more than 50% in an instant. He advised avoiding KOSDAQ stocks that have already risen 50 to 100%.

He analyzed this as an attempt to pick some of the beaten-down stocks to prove credibility and create star stocks. He added that just as one rescues a particular soldier for symbolism even when it is not rational, institutional investors in the market are using this strategy at the bottom.

Lee Seung-jo expects the index to remain in a range over the next three months and proposed investing through a both-buy strategy. He stressed that attention should go to stocks that once became stars in the materials, parts, and equipment (so-bujang) sector, which has fallen sharply, as well as robot and aerospace-related stocks. He also said that aiming at stocks Trump could make into policy themes around the November midterm elections is the core of the next three-month strategy. He added that this strategy will be maintained until the 7,000 level becomes a support rather than resistance.

Lee Seung-jo diagnosed that the Korean market is currently decoupling from the US market. He analyzed that US institutional investors such as BlackRock and hedge funds are building a structural range ahead of the September contract range liquidation and the October rollover. He explained that they are trying to shake out retail investors heavily invested in their core stocks without helping them recover their money, and are moving to accumulate those shares themselves.

Lee Seung-jo cited the AC POSCO ETF as an example of an ETF that fell sharply in the past. He explained that a 9,000-won ETF dropped significantly. He also added that stocks related to the Hyundai Motor fixed physical AI ETF, often called the Hyundai Motor Boston Dynamics ETF, mostly fell sharply as well. He gave a concrete example, saying Hyundai AutoEver had lost two-thirds of its value.

He stressed that for now he will take profits when trading earns them and has no intention of holding for a longer trend. He added that there are many stocks to choose from.

This reflects his view that at current index levels, the return expectations from leveraged investing are low.

Lee Seung-jo noted that Alteogen has nearly hit its daily upper limit, and explained that for the KODEX KOSDAQ ETF to rise, secondary battery-related stocks need to move. However, he said he does not want to invest in EcoPro or EcoPro BM for now. Instead, he proposed targeting small and mid-cap stocks tied to all-solid-state batteries that have fallen sharply, such as TCC Aluminum, Kos New Materials, and Hana Technology. He added that many of these stocks have bottomed and are going sideways in a symmetrical triangle formation, so a 20 to 30% short-term return can be expected.

On the timing of semiconductor investments, Lee Seung-jo stressed that when Chuangxin Memory is halved is what matters. He cited the case of SpaceX, which pulled back from $200 to $110 and then rebounded sharply, and said he is watching for the point at which Chuangxin Memory, now at 60 yuan, falls to 30 yuan. He said Chuangxin Memory is currently being capped at 52 yuan and sliding, which appears to be Chinese old funds defending the share price. He expects the fear surrounding the Chinese company listed on July 27 to have a bigger impact on Korea's semiconductor market, and that if Chuangxin Memory is halved, stocks such as SK Hynix will come back to life. He expects this reality to become clear around October or November, and added that Chinese national funds will desperately manage share prices until Xi meets Trump. He forecast that SK Hynix can only rise in earnest once the stock drops below 60 yuan and keeps rebounding around the 45 to 50 yuan level before breaking.

He judged that if the stock keeps rising after a sale, that could be the start of a full-scale bull market. Accordingly, he is considering a plan of short-term trading with half of the position and holding the other half until the direction is confirmed.

Lee Seung-jo forecast that former President Donald Trump will have difficulty winning the next election. Instead, he analyzed that Trump will concentrate all his efforts on placing his own people in the next government so that he avoids prison. He added that Trump will focus on business so that his family can make money.

On geopolitical risk, Lee Seung-jo said the most urgent question is when Russian President Vladimir Putin will end the war in Ukraine. He expected that the September summit between Xi and Trump could provide an answer to this issue. He analyzed that Putin, under pressure from drone warfare bombing even his homeland, will want to end the war quickly and will accept it once the surrounding issues are cleared up. He added that the Strait of Hormuz could shift to a structure where a transit fee is charged.

Lee Seung-jo said that after the US midterm elections, Korea should watch which sector will be the second focus of US investment. Using nuclear power, steel, power equipment, and shipbuilding as examples, he explained that Hanwha Ocean is trying to break through the 90,000-won resistance line and is pulling related equipment stocks along with it. He mentioned that the Louisiana terminal, LNG, Alaska, and Greenland resource development could be raised again, and predicted that once the Strait of Hormuz is cleared in November, former President Trump will accelerate US investment from Japan and Korea to show job creation and results. He said the related stocks will soon be core names in Samsung Electronics, SK Hynix, Hyundai Motor, and the POSCO Group, along with shipbuilding, and forecast that they will lead the index from October to December.