Foreigners Raise Floor ... Stock-Specific Market in H2

A phenomenon where Nvidia's upward trend did not translate to domestic semiconductor stocks was observed. Analysis suggests this is because AI-related investors are diversifying their supply and demand into network-related stocks, in addition to memory semiconductors. Investors are looking for direct AI benefits not only in memory semiconductors but across the entire AI ecosystem, which seems to have heightened doubts about the relative attractiveness of domestic semiconductor stocks.

As market perception spreads that AI investment doesn't need to be concentrated in memory semiconductors, Nvidia's strength isn't directly leading to stock price increases for domestic memory semiconductor companies. Investors are seeking investment opportunities in various sectors due to the broad advancement of AI-related technologies, which poses a new challenge for domestic semiconductor companies.

Diversified supply and demand have negatively impacted the stock performance of domestic semiconductor companies. Investors are no longer solely relying on memory semiconductors for AI exposure; they are turning their attention to network equipment and service-related companies like Nvidia. This shift further highlights the need for domestic semiconductor companies to strengthen technological competitiveness and diversify their business portfolios.

With an increasing number of alternative AI-related investment options beyond memory semiconductors, investors' doubts about the attractiveness of domestic semiconductor stocks are growing. This raises fundamental questions about how domestic companies will provide differentiated value amidst the complex supply and demand changes in the global AI market, beyond just technological issues.

Foreign investors are showing a tendency to not want the index to fall through futures buying, but also feeling burdened by a sharp rise. This is interpreted as an intention to limit market volatility and keep the index within a certain price range. Since July, the KOSPI has continued a range-bound market, moving within the 6,400-7,000 point range.

This trading pattern by foreigners suggests a strategy to maintain the current level and seek stability rather than a sharp directional shift in the index. The burden of a significant rise in the index may be attributed to a combination of factors, including the possibility of further interest rate hikes and concerns about slowing corporate earnings.

As a result, foreign investors are maintaining long positions in the futures market, defending against a certain level of index decline, but also not pushing the index significantly higher, leading to a market that oscillates within a box.

The debate over additional US tariffs on semiconductors is interpreted as a political pressure tactic rather than having substantial effect. The prevailing analysis is that its realism is low due to concerns about potential disruptions to data center construction within the United States. Some believe this pressure could be used to accelerate domestic companies' factory construction in the US.

In a situation where the US government is demanding semiconductor companies expand domestic production, additional tariffs could actually dampen corporate investment sentiment and disrupt production plans. Particularly if it affects the semiconductor supply chain necessary for building key infrastructure like data centers, it could negatively impact America's digital economic growth.

Therefore, many opine that discussions about additional semiconductor tariffs may be a short-term stock price fluctuation factor, but not a realistic measure that would hinder the growth of the AI industry or fundamentally undermine the competitiveness of the domestic semiconductor industry in the long term. Rather, such controversy could serve as an opportunity for domestic semiconductor companies to respond to global supply chain restructuring and reconsider their investment plans in the US.

The debate over additional US tariffs on semiconductors is interpreted as a political pressure tactic rather than having substantial effect. The prevailing analysis is that its realism is low due to concerns about potential disruptions to data center construction within the United States. Some believe this pressure could be used to accelerate domestic companies' factory construction in the US.

There was a question regarding the US listing plan for Solidigm, a subsidiary established by SK hynix after acquiring Intel's NAND flash business unit. SK hynix stated that the listing is not confirmed and is still under discussion. This response differs from market expectations of an accelerated listing, suggesting a cautious approach.

The potential listing of Solidigm is considered an important matter that could positively impact SK hynix's corporate value in the future. If the listing materializes, SK hynix would have the opportunity to re-evaluate Solidigm's value and secure investment funds. However, concrete plans or schedules are not yet confirmed.

A shift in foreign investors' trading patterns has been detected. After failing to establish a direction in the morning, foreigners began to suddenly increase futures buying after 1 PM. This is interpreted not merely as market participation, but as an intention to continuously raise the index's floor.

This foreign strategy is analyzed as an attempt to defend against a sharp market decline while maintaining a certain level of upward momentum. A buying advantage in the futures market can partially offset instability in the spot market and contribute to stabilizing the overall market sentiment.

Foreign investors appear to be employing a strategy of gradually raising the floor by leveraging market volatility. This can be interpreted as a move to secure market stability from a medium-to-long term perspective rather than short-term stock price prediction.

While 2-year Treasury bond yields are generally used as a leading indicator for the market, in Korea, the 3-year Treasury bond yield is drawing more attention as a more effective indicator. This is because the 3-year Treasury bond has a higher trading volume and issuance, best reflecting market conditions.

Therefore, to predict the direction of the domestic stock market, it is necessary to closely monitor the movement of the 3-year Treasury bond yield. Fluctuations in this yield can be an important signal to gauge market liquidity, inflation expectations, and the central bank's monetary policy direction.

In a high interest rate environment, it is necessary to shift away from growth stock momentum and prepare for an investment rotation into value and dividend stocks. The distant future value promised by growth stocks can feel relatively hollow in a high-interest rate environment. Investors will evaluate the attractiveness of stocks by comparing them with current interest rates.

When bond yields rise, a competitive relationship forms between stocks and bonds, requiring companies to offer more attractive dividend policies or solid earnings to entice investors. Particularly, interest in large-cap stocks like Samsung Electronics, which actively utilize share buyback and dividend policies, may increase.

This change in market environment demands portfolio rebalancing. Companies that demonstrate current value and provide stable returns are expected to draw attention, rather than those primarily valued for their growth potential.

A strong won acts as a significant boon for companies with a high proportion of raw material imports, improving their margins. Essential consumer goods companies, such as food manufacturers that import raw materials from overseas, are typical beneficiaries. The strong won helps reduce import costs, increasing corporate profitability.

Conversely, analysis suggests that if a company is negatively impacted by the strong won due to exports, it should be avoided as an investment, as it lacks price competitiveness. In other words, one should only invest in companies that possess strong price competitiveness such, that customers will purchase their products regardless of exchange rate fluctuations.

Therefore, in a strong won environment, it is crucial to carefully analyze a company's business model and cost structure, understanding that performance can vary significantly with exchange rate changes, and approach investments accordingly. Export-oriented companies with weak price competitiveness may face higher investment risks.

A forecast suggests that the intensity of individual investor demand, which led the stock market earlier this year, is likely to weaken in the second half. This is due to the collapse of individual customer deposits below 100 trillion won, combined with year-end capital gains tax avoidance tendencies, which are expected to reduce individuals' buying power. This implies that the market is more likely to move based on individual stocks rather than an overall index rise.

In the second half, assistance from pension funds is also unlikely, meaning there will be no clear dominant force to drive the entire market upwards. Therefore, investment strategies need to shift from tracking the overall index to selecting stocks with growth potential or specific themes. The conclusion is that a diverse range of 'main characters' will emerge in this stock-specific market.

The seasonal adjustment in September, considering the characteristics of a US midterm election year, has also been analyzed as a potential buying opportunity. Past cases suggest that opportunities for bargain hunting may arise during such periods, which could be favorable for prepared investors.

In conclusion, the stock market in the second half is projected to be a 'stock-specific market' where the strength of individual stocks stands out more than an overall index rise, due to weakened individual investor demand and external factors. Investors will need to focus more on individual companies' fundamentals and growth stories.

Analysis suggests that a significant portion of the recent foreign selling is due to mechanical selling by asset-allocation funds that prioritize risk management. When Korea's stock market volatility index (V-KOSPI) rises above a certain level, these funds tend to automatically sell stocks according to their risk parity strategies.

Selling begins when the V-KOSPI index is above 30, with concentrated selling occurring when it rises above 50, and almost liquidation-level selling when it exceeds 60. This is interpreted as a mechanical reaction to index volatility rather than a change in market fundamentals.

For foreign buying intensity to strengthen, the V-KOSPI index is expected to stabilize below 30. A decrease in the volatility index would ease selling pressure from asset-allocation funds, which could be a positive signal for foreign investors to return to the Korean stock market.

While price declines are often perceived as a negative, it is argued that they are actually an essential part of innovation aimed at improving productivity. All innovations ultimately lead to lower prices and higher productivity. Therefore, current price declines should not be viewed solely negatively; a perspective is needed that these can be overcome through increased sales volume (Q).

For example, Eli Lilly's obesity treatment saw sales explode after a price reduction, leading to a 58% revenue growth. This demonstrates how crucial a successful transition from a price (P) cycle to a volume (Q) cycle is for corporate growth.

Innovation typically starts with high prices, but as technology stabilizes and mass production becomes possible, prices fall and sales volume increases. Companies must effectively manage this transition from a P cycle to a Q cycle to achieve sustained growth.

Analysis shows that the PBR (Price-to-Book Ratio) valuation of semiconductor companies is more deeply correlated with operating profit growth than with dividends. In other words, how high a company's operating profit growth rate is, rather than the amount of dividends, acts as a much more important indicator for stock valuation.

While the semiconductor industry is fundamentally classified as cyclical, consistently demonstrating high, non-cyclical growth in operating profit is key to enhancing valuation. The degree to which the profit slope maintains its growth until 2028 and 2029 plays a crucial role in determining long-term corporate value.

Share buybacks can be a short-term means of boosting a company's stock price, but they are a temporary strategy, it was pointed out. Typically, share buybacks occur over about 60 trading days, and if foreign selling continues after the buyback period ends, there is no one to defend the stock price.

Furthermore, it was argued that shareholder return policies are not a panacea for all companies. Especially for high-net-worth individuals, the burden of comprehensive income tax on dividends is high, leading to a tendency to avoid dividends. This suggests that shareholder value is difficult to maximize with dividend policies alone.

In the case of semiconductor companies, intrinsic value was emphasized to lie in building growth models through innovation rather than shareholder returns. That is, securing future growth engines through continuous technological development and market expansion is key to increasing long-term shareholder value.

It was pointed out that overwhelming R&D expenditure by domestic semiconductor companies is essential to maintain the technological gap with latecomers like China's CXMT (ChangXin Memory Technologies). The memory semiconductor industry is characterized by process differences that affect overall profitability, making technological leadership extremely important.

The outlook is that the market will be reassured if an overwhelming advantage in process technology can be secured and that difference clearly demonstrated. Particularly, from HBM4 onwards, foundry technology capability will become even more crucial, with integrated capabilities in design and manufacturing becoming the core of competitiveness.

Only by leading process miniaturization and new technology development through continuous R&D investment can Korean companies maintain competitiveness and secure future growth in the rapidly changing global semiconductor market.

The core strategy for the second half's stock-specific market can be summarized into two points. First is to focus on the volume (Q) cycle that will inevitably follow the AI price cycle. As the prices of AI-related technologies and products stabilize, the market's focus will shift from price to how much volume can be produced and sold. Companies with mass production and distribution capabilities may then come to the forefront.

The second strategy is to target 'empty houses.' This refers to investing in stocks with low foreign ownership or those neglected by individual investors. Similar to the rebellion of second-tier cosmetic companies, there is an expectation that companies outside the mainstream market interest but with growth potential can achieve unexpected results.

Therefore, in the second half, it is crucial to read changes in market trends and seize new opportunities arising as AI technology spreads and enters the popularization phase. Additionally, a discerning eye is required to find undervalued or hidden 'empty houses of expectation' rather than excessively concentrated stocks.

This strategy demands active investment that goes beyond simple index tracking, requiring in-depth analysis of individual companies' fundamentals and market positions. Opportunities to generate profits should be sought by identifying new growth engines amidst market changes and making bold investments in overlooked quality companies.

A phenomenon of credit loans surging by 40% in just 15 trading days was observed. This is presumed to be investors' moves to maximize profits by purchasing blue-chip stocks like Samsung Electronics and SK hynix on credit, rather than typical leverage investing. In other words, it shows a different pattern from leverage utilization in a low-interest rate era.

This increase in credit loans raises concerns that it could negatively impact market soundness. A sharp rise in credit can lead to forced selling by investors if market volatility increases, thereby heightening overall market instability.

In stock trading, there are two main technical approaches: dip trading and breakout trading. Dip trading is a strategy of buying near support lines during a price decline, expecting the stock to rebound after falling to a certain level. Its goal is to realize profits through low-price purchases.

Breakout trading, on the other hand, is a strategy of buying when the stock price breaks through its previous high and rises. It aims for further gains by chasing the stock when it forms strong upward momentum and sets new highs. This can be seen as part of a trend-following strategy.

These trading methods are applied differently depending on the investor's propensity and market conditions. Generally, experienced professionals select appropriate trading techniques considering market trends and stock characteristics, but ordinary investors may miss opportunities or incur losses by simply adhering to one method.

Attention was focused on the possibility of a shift in the Federal Reserve's (Fed) policy stance at the Jackson Hole meeting. In particular, analysis suggested paying close attention to whether the Fed's focus would shift from employment to inflation. If the Fed adopts a more hawkish stance, prioritizing price stability, it could significantly impact the market.

A hawkish shift by the Fed could lead to further interest rate hikes or a prolonged high-interest rate environment, which could reduce market liquidity and increase concerns about slowing corporate earnings in the stock market. Therefore, it is necessary to closely examine the Fed's tone and key messages at this meeting.

However, some assessments suggest that the actual impact of this Jackson Hole meeting will be limited. It is possible that most of the information is already priced into the market, or that it will merely reconfirm existing stances rather than making radical policy changes.

An unusual phenomenon recently occurred where the volatility index (V-KOSPI) fell by 5% despite the market's downtrend. Typically, when the market declines, the volatility index rises due to increased investor anxiety. Therefore, this drop in the volatility index can be interpreted as a positive sign that the market is gradually entering a normalization process.

A decline in the volatility index indicates that market participants' investment sentiment is stabilizing. It suggests that investment is based on the market's intrinsic value rather than sharp fear or panic selling. This raises expectations that market fundamentals can remain robust despite short-term stock price declines.

While full market normalization may take time, the drop in the volatility index can be seen as an important turning point. Investors need to be aware of these market changes and maintain a cautious approach without being swept away by excessive fear.

This phenomenon shows that market risk perception is gradually becoming more realistic, easing excessive fear. As market participants adapt to uncertainty and begin to make rational judgments, it serves as evidence that the market is moving in a healthy direction.

Nvidia plans to apply BBU (Battery Backup Unit) for the first time in its next-generation 'Blackwell' architecture. BBU plays a role in stabilizing power supply, which was emphasized as crucial in high-performance computing environments. Demand for BBUs is expected to significantly increase in the future for stable data center operations.

The introduction of BBU is expected to contribute not only to power backup but also to maximizing system stability and efficiency. As stable management of the enormous power consumption generated during AI model training and inference becomes a key challenge, the importance of power management solutions like BBU is further highlighted.

These changes are expected to provide new growth opportunities for battery manufacturers like Samsung SDI and related value chain companies. Nvidia's Blackwell introduction is likely to accelerate the expansion of the BBU market, potentially having a positive impact on the performance of related companies.

Therefore, investors need to pay attention to companies with BBU technology development and production capabilities. The power management solutions market is expected to grow alongside the development of AI technology, which could emerge as a new investment theme.