In an Interest Rate Hike Period, Protecting Investment Capital is Paramount

The market tends to interpret the dot plot self-servingly, maintaining expectations that the Fed will complete one more rate hike this year and then hold steady next year. Experts warn that despite the Fed clearly indicating its entry into an interest rate hike cycle this year, the market is failing to properly recognize this.

The Consumer Price Index (CPI) results, to be announced on October 14, are expected to be a major market variable. Recent August oil-based indicators acted as a factor for interest rate hikes, and there is high anticipation for the October CPI, which will reflect the rise in oil prices in September. The Yeouido investment industry recommends a conservative response until mid-October, forecasting continued market uncertainty until the indicators are confirmed.

Despite a drop in term premium, 10-year bond yields are re-rising. This is due to a surge in long-term bond issuance by not only countries but also hyperscaler companies, leading to an oversupply in the bond market. With bond supply exceeding demand, it offsets downward pressure on interest rates and instead contributes to rising rates, driven by supply and demand factors.

While current retail sales data remains robust, there is a high possibility that consumption will decline due to the ripple effect of future interest rate hikes. It is now pointed out that the market should be more wary of the possibility of an economic recession due to shrinking consumer sentiment rather than interest rates themselves.

Investors' difficulty in securing selling timing rather than buying timing is deeply related to human evolutionary instincts. According to Nobel laureate Richard Thaler's theory, humans react more than twice as strongly to risk and feel significant pain from losses. As a result, stop-loss is perceived as pain akin to cutting off a part of the body, making it difficult to execute easily. This psychological barrier can hinder investors from making rational decisions.

The 'plus alpha' effect of increased fab construction in the U.S. on domestic materials, parts, and equipment (SooBujang) companies is unlikely to be significant. The SooBujang industry has already entered a massive growth cycle, and the lead time from equipment order to delivery is greatly increasing. This increase in lead time is due to a shortage of component supply, creating a favorable period for equipment manufacturers where both quantity (Q) and price (P) are improving simultaneously.

Concerns about the memory semiconductor industry are not significant. Typically, an appropriate inventory level is considered to be 6-8 weeks, but current supply-side inventory is very low, at less than 10 days. This is a result of reduced investment about two years ago due to industry downturn, which has led to the current supply shortage. Therefore, the current memory industry is expected to have strong price support due to inventory shortages.

The overall increase in semiconductor volume (Q) is expected to be limited until 2027. This is due to the extremely high process difficulty required for producing high-performance memory such as HBM4 (High Bandwidth Memory 4th generation). HBM4 production consumes significantly more capacity (Capa) than conventional memory, leading to a de facto reduction in supply. Consequently, the overall increase in memory production is inevitably slowed down by this structural factor.

As Elon Musk announced the development of the Tesla Bot, physical AI requires more than 10 times the semiconductors of existing automotive electronic systems. This will trigger an explosive demand that cannot be met by the current scale of semiconductor expansion, as the number of devices will increase geometrically, not on a per-person basis.

Like Hyundai Motor and Hyundai Mobis' attempts to accumulate data in factories, securing manufacturing-based physical data is a crucial factor in leading the physical AI era, and this could be a new opportunity for manufacturing powerhouses like Korea and Japan.

Analysis suggests that when market expectations diminish, there's a greater chance of a rebound upon earnings announcements. The market is currently in an ambiguous state, finding it difficult to pinpoint bullish momentum, and this environment can actually create opportunities for undervalued companies. Future Micron earnings announcements are being watched to see if they will serve as a significant moment for the market to acknowledge the semiconductor sector's bottom.

In the US market, cybersecurity and software stocks have recently shown strength, and in-depth study of these sectors could yield better returns. However, it is important to recognize that domestic security stocks cannot yet expect the same level of performance as US companies.

In the past, security primarily focused on preventing external intrusions, but now it has evolved to monitoring internal AI systems themselves to prevent them from causing problems. Especially as the era of granting company payment authority to AI agents arrives, malfunctions or security vulnerabilities of internal AI can pose a significant threat. Therefore, the security sector is emerging as a promising sector with solid performance and guidance backing it.

This is because market uncertainty can increase due to profit-taking before Chuseok. At this point, it is more important to protect seed money by minimizing losses rather than making more profit. One should closely monitor market conditions and wait for an opportunity to initiate aggressive investments in the future.