Kosdaq Bull Market: The Story Behind It and Strategies

With semiconductor SoobuJang and secondary batteries leading the index, the Kosdaq rose to 915 points. Meanwhile, the KOSPI fell 1.2% due to foreign selling worth 1.3 trillion won, as the US 10-year Treasury yield recorded 5.32%.

Despite high interest rates with the US 10-year Treasury yield reaching 5.32% during Asian trading hours, the Kosdaq market showed strong momentum, driven by semiconductor SoobuJang and secondary battery stocks.

It is analyzed that the correlation between the stock price movements of other semiconductor-related companies like Nvidia, Broadcom, and TSMC, and domestic Samsung Electronics and SK Hynix, has somewhat weakened, showing a time lag.

Recent foreign selling is seen more as profit-taking than a pessimistic market outlook, with cumulative selling this year reaching 200 trillion won.

With cumulative foreign selling exceeding 200 trillion won this year, the current selling is interpreted not as a pessimistic view of the market but as exercising caution in active buying and realizing profits from existing portfolios.

Considering that the stock price did not rise significantly after Micron's earnings announcement, it is analyzed that now is an opportune time for phased buying, without being constrained by uncertainties before and after Samsung Electronics' preliminary earnings announcement.

September export data surged to $60 billion, clearly signaling quarterly earnings improvement. While the securities industry consensus is around 103-105 trillion won, analysis suggests Samsung Electronics' earnings could reach 110 trillion won, even considering exchange rate volatility.

This forecast is based on the trend of semiconductor exports, which recorded $60 billion in September.

It was stated that there is sufficient room for earnings improvement even considering exchange rate volatility, and the fact that the stock price did not rise before the earnings announcement, meaning expectations were not pre-reflected, could act as an opportunity.

Samsung Electronics currently aims for a 50% dividend payout ratio, and SK Hynix also pledges at least 50% shareholder returns.

It was suggested that shareholder return policies can act as a trigger for stock price increases, as seen with Nvidia's stock reaching a new high after announcing large-scale share buybacks, and Micron's stock movements based on expectations for dividend and share buyback plans.

It is analyzed that the actual dividend amount and the sustainability of shareholder return policies will have a greater impact on stock prices, rather than the difference between cash dividends and treasury stock buybacks.

It is analyzed that with the growing perception of Samsung Electronics being undervalued (despite Micron's market cap being similar, Samsung Electronics' earnings are almost double Micron's), Samsung Electronics is emerging as a priority investment target within limited market funds.

I've also somewhat changed my perspective, but many people are talking about Samsung Electronics these days. I think that supply and demand are leaning a bit more towards Samsung Electronics than Hynix.

Lee Seon-yeop

The increasing demand for high-spec substrates, particularly with the expansion of the inference artificial intelligence (AI) market, coupled with Samsung Electro-Mechanics' large-scale order and investment announcement, became a factor driving the simultaneous rise of related stocks.

It was suggested that a strategy of making small purchases, like sending out scouts, during corrections is necessary, with Simmtech as the leader and TLB, which is associated with Samsung Electro-Mechanics, as a follower.

Stocks with price burden have risen for a reason; if that rationale is not compromised, they are likely to continue to rise.

Conversely, stocks that have risen less may have clear reasons for not having risen, and there is a risk of a greater decline during corrections, so it is advisable to consider profit-taking once a certain profit has been generated.

I think if I have to buy, I should buy what's already moving, no matter what happens. Companies with price burden have come up for a reason. If that logic isn't broken, I think those companies can go further.

Lee Seon-yeop

The growth of the ESS (Energy Storage System) market is anticipated, particularly due to the expansion of data centers in the US, and an atmosphere is forming where Korean companies are seeking opportunities amidst the competitive landscape of the LFP battery market.

Samsung SDI is ahead of its competitors in preparing for the data center ESS market, and material companies within the value chain, such as POSCO Future M and L&F, are also expected to benefit regardless of battery type.

Although funds have flowed into SoobuJang stocks as Samsung Electronics and SK Hynix retreated significantly, it is necessary to think the opposite.

In the second half, there is a high possibility of achieving overwhelmingly high returns even by trading companies other than Samsung Electronics or SK Hynix.

In a market where stocks are rising by 20% while Samsung Electronics and SK Hynix rise by 5%, focusing only on these two stocks can lead to being left behind in the returns game.

However, if considering long-term holding for 3 to 6 years or more, they remain the best blue-chip stocks, and value appreciation can be expected.

The current KOSPI index, considering the exchange rate, has already seen a significant rebound; for foreign investors trading in dollars, Samsung Electronics may appear to have only fallen about 15% from its peak.

In conclusion, Samsung Electronics and SK Hynix are likely to be marginalized in the short-term returns game, and now is the time to pay attention to small and medium-sized stocks.

Institutional and foreign investors participating in the market have large funds, but they tend to invest in sectors and stocks whose scale they can control to realize capital gains.

Therefore, an environment is created where a virtuous cycle can occur quickly when funds flow into smaller sectors.

This trend focusing on small and medium-sized stocks is expected to continue until the second half, with the Kosdaq index rising more than 2% to 917 points today.

It is necessary to pay attention to small and medium-sized stocks that institutions can control, and the secondary battery sector and optical communication in AI hardware are also receiving attention.

Foreign investors are strengthening their selling pressure near the upper end of the KOSPI's box range, pushing the index down.

Spot selling continues, but a shift to futures buying emerged in the afternoon, suggesting that the KOSPI will likely see its lower bound gradually rise while its upper bound remains restricted for some time.

With limited upward potential for the KOSPI and Kosdaq indices until AI-related uncertainties and interest rate directions are determined, investors are concentrating supply and demand in the nimble SoobuJang and secondary battery sectors.

This trend is likely to continue until interest rates are fully determined or AI noise is resolved.

Foreign supply and demand showed over 20 trillion won in selling pressure on the KOSPI for a month, with a clear tendency to sell once it crosses 7,000 points.

It is also argued that from the perspective of foreign investors, who have seen over 10% returns on a dollar basis due to the depreciating exchange rate, even if the index falls, their return rate is not bad.

It went to SoobuJang rather than Hynix, and then to secondary batteries and so on. So that was a clear day.

Kim Jang-yeol

Individual sectors like semiconductor SoobuJang are more suitable for a trading approach rather than long-term holding.

Holding for more than a week tends to sharply lower returns, and short-term rotational trading driven by supply and demand, rather than trend-driven gains based on earnings, is common.

Until mid-November, when uncertainties regarding exchange rates and policy changes are resolved, events like earnings announcements are expected to drive the market.

Although Samsung Electro-Mechanics announced equipment orders worth 290 billion won, market reactions to individual news are sensitive, with the impact varying depending on timing and market sentiment.

The market is interpreting the background of EcoPro BM's participation, unlike existing sulfide-related stocks such as Isu Specialty Chemical or Lake Materials, in various ways.

With news of this cooperation, expectations for the commercialization of Samsung SDI's all-solid-state battery business were reflected, leading to an over 8% increase in Samsung SDI's stock price.

Securing Samsung Electro-Mechanics as a new client beyond past patent disputes is highly significant. Hanmi Semiconductor will supply FCBGA equipment worth 24.5 billion won to Samsung Electro-Mechanics for the first time through this contract.

This is the first delivery to Samsung Electronics and its affiliate Samsung Electro-Mechanics, with whom there was a past patent dispute, which holds significant meaning as it secures a new customer.

However, Hanmi Semiconductor still faces valuation pressure, limiting its rise, and the day's increase is primarily attributed to the news of securing a new client.

In the case of Hanmi Semiconductor, good news also came out, and reporters were surprised that Samsung Electronics had traded with them. The fact that they delivered to Samsung Electro-Mechanics for the first time is very important.

Panelist

A forecast emerged that power shortages would affect the entire supply chain. Morgan Stanley emphasized that US data centers would face a 34% power deficit by 2028. This report analyzed that power shortages would more broadly impact the supply chain, including memory, optical communications, power management, and analog.

The market may use this as a pretext for memory weakness, and since power-related stocks have not reacted significantly, questions are raised about whether this issue is new. Considering that Nvidia previously projected 70% growth while also setting prerequisites for memory and power supply, some argue that data center power shortages are not a new issue.

Semiconductor prices are currently projected to rise by over 20% from a baseline of 100 to 120 by spring to fall next year. After that, prices are expected to decline, falling to around 90 by the end of next year or the first half of 2028.

The speaker noted that opinions might differ on whether current stock prices already reflect the risk of decline or are incorporating an upward turn. It was suggested that investment decisions are difficult in a market where pre-emptive trading and supply-demand logic intricately interact.

Seven semiconductor ETFs are scheduled for electrical changes (rebalancing) on October 8, coinciding with Samsung Electronics' preliminary earnings announcement.

Securities firms analyze that passive funds may shift to small and medium-sized stocks or the SoobuJang sector as Samsung Electronics' weighting decreases due to rebalancing.

An overweight opinion on PCB substrate stocks is consistent, and movements toward target prices are observed; profit-taking should be considered if they exceed 85-90%.

Sands Lab's stock price has recovered its decline over the past three months and is approaching a short-term peak, with a high possibility of falling after forming an upper shadow. The speaker, who has significant experience trading security stocks, suggested that selling tomorrow would be appropriate from a short-term perspective.

Currently, the Kosdaq market is rising primarily around SoobuJang and secondary batteries, but neglected sectors like shipbuilding and cosmetics are losing momentum due to insufficient fund inflow.

Deposits have recovered to around 103 trillion won but are still 30% lower than before, and a lack of trading volume makes rapid rotational trading difficult outside of leading stocks.

Although the Kosdaq is said to have settled above 900 points for the first time in three months, whether the upward trend will continue depends on policy effects and fund inflows.

Unlike the sluggish market in September, marred by negative factors such as the FOMC meeting and rising international oil prices, October has seen stocks moving actively.

While the KOSPI remains in a box range, the Kosdaq has broken through its previous high, with trading volume slightly increasing, showing a distinctly different pattern on the charts.

This market shift suggests that a stock-specific market is expanding.

The sustained growth of AI-related stocks is essential for maintaining the current market, with specific areas like data centers within the AI stock group leading the upward trend.

A rotational trade has been observed, with GPU-related companies like Nvidia leading the market, followed by memory, substrates, and equipment, and currently, semiconductor equipment stocks are strong globally in Japan, Taiwan, and the US.

The global semiconductor market trend is transforming in line with AI growth, with TSMC, whose market capitalization is equivalent to Samsung Electronics and SK Hynix combined, growing by increasing foundry prices.

While top-tier market capitalization stocks support the index, there's a risk of other stocks falling; thus, weaker stocks may collapse first during a market downturn.

Therefore, it's advised to trade primarily in strong stocks and avoid a strategy of waiting for weaker stocks to recover.

Currently, semiconductor equipment stocks are showing an upward trend globally and acting as market leaders, but a cautious approach is needed rather than late chasing.

Promising sectors include renewable energy (solar), ESS, nuclear power, and hydrogen fuel cells, with the three major power-related stocks (transformers, transmission/distribution, power cables) also mentioned.

Considering President Trump's policy stance, solar power may be more advantageous than wind power.

For investors less confident in their stock-picking abilities, utilizing sector-specific ETFs can be an alternative.

While KOSPI large-cap stocks performed poorly, Kosdaq's SoobuJang stocks showed strong performance, with secondary batteries and even pharmaceutical bios also moving together.

Originally, semiconductor SoobuJang and secondary batteries were considered to be in a conflicting relationship in terms of supply and demand, but this dynamic changed from mid-September.

Now, SoobuJang and secondary batteries are frequently grouped together, rising simultaneously.

Among the bio sectors that had suffered in the past, medical AI and stocks that had traditionally engaged in export license-out showed signs of rebound.

The Kosdaq rose nearly 3% today, specifically 2.98%, while the KOSPI fell 0.9% in comparison, which could deliver a psychological blow to market participants.

Jusung Engineering climbed from around 3rd to 2nd place in Kosdaq market capitalization, with Alteogen at 18.2 trillion won and Jusung Engineering at 13 trillion won.

The rise in SoobuJang stocks seems to have been triggered by the idea that semiconductors will sell more after the release of GPT Astra, along with mentions that Micron will face supply shortages even in 2027, requiring expansion and continued demand for SoobuJang equipment.

It was noted that the global trend of SoobuJang stocks reaching historic highs, similar to Japan's Advantest, is confirmed, and Jusung Engineering's rise in market cap ranking in the domestic market is highly significant.

Funds that previously concentrated on the KOSPI have already moved to the Kosdaq, so I assess that extreme concentration in supply and demand has passed.

I believe that now, when large-cap stocks move, the Kosdaq will also move together.

It was suggested that giving up large-cap stocks in a portfolio is not an absolute necessity, and there is room for Kosdaq stocks to align with those hitting new highs, so a strategy of also considering underlying stocks is effective.

An opinion was presented that if large-cap weighting was 70-80% in the past, it should be reduced now.

There is a possibility of a rebound during earnings announcement periods, and buying interest may emerge during corrections. Analysis suggests that as we move into mid-to-late October, interest in consumer goods and other earnings-driven stocks will increase, while SoobuJang stocks might temporarily pull back.

Accordingly, the market is likely to enter a rotational trading phase, and a strategy of focusing on SoobuJang in the October market while securing some funds for trading is recommended.

For those who held cosmetics stocks, it would have been a bitter holiday, but fortunately today, there was no further sharp decline, and they managed to hold around the 50-day line.

Hwang Yu-hyun, Team Head

Since September 11, the cumulative foreign futures volume has been around +380 contracts, indicating a neutral market position.

Foreign investors are believed to be observing the KOSPI market without showing a clear direction.

Regarding Samsung Electronics' earnings announcement, the opinion is that it will be positive but with limited significant upside, similar to Micron, rather than extreme disappointment-driven selling.

The Kosdaq's rebound without sliding from its previous high is a fortunate trend, but a sustained market strength can only be acknowledged if it rises alongside KOSPI large-cap stocks.

The prevailing opinion is that Samsung Electronics' earnings, like Micron's case, will be positive but with limited upside. In the past, the Kosdaq tended to rebound when large-cap stocks were weak, but this time, the robust performance of SoobuJang and the bottoming out of secondary batteries are driving the index up.

It is understandable for the Kosdaq to be strong when semiconductors are not fully broken but in a consolidation phase; however, it needs to be confirmed whether the Kosdaq will rise alongside Samsung Electronics and Hynix when they turn upward.

If both large-cap semiconductor stocks and the Kosdaq rise together, it could be the time to increase Kosdaq exposure, but that timing has not yet been confirmed.

Instead, focusing on stocks that have undergone correction and are at the end of their convergence, especially the main semiconductor large-cap stocks, was suggested as a rational strategy.

If large-cap stocks like Samsung Electronics or SK Hynix decline, SoobuJang stocks could fall even more sharply, so maintaining a 7:3 ratio between large-cap and SoobuJang stocks is effective.

Since SoobuJang-related stocks were already emphasized 2-4 weeks ago, a rolling strategy of reducing exposure by about 30% upon reaching a previous high is necessary from a short-term trading perspective.

A rolling strategy of selling and then repurchasing the same amount if the stock falls, then holding the remaining 70% if it rises, is effective.

Rather than setting a single target price, identifying highs and lows by zone and responding flexibly is a realistic investment approach.

For the next six months, the SoobuJang sector shows the best probability, with AI momentum-driven semiconductor-related stocks expected to be key to the market.

Market attention is focused on this Thursday's options expiration and Samsung Electronics' preliminary earnings announcement.

Analysis of derivatives market movements suggests a strong tendency to settle higher for this options expiration, indicating a need to prepare for an upside.

Although the KOSPI has recently underperformed the Kosdaq, it is expected to rise and balance out. Given the positive situation in the US stock market, with the Nasdaq hitting new highs and employment figures interpreted as a reason to delay interest rate hikes, the domestic market is also likely to move upwards rather than downwards this options expiration.

While Micron Technology in the US is approaching its previous high, domestic SoobuJang stocks have already risen significantly, presenting an opposite situation to the US.

A rational market rebalancing is analyzed as more likely to occur through a rise in large-cap semiconductor stocks like Samsung Electronics and SK Hynix rather than a decline in domestic SoobuJang stocks.

Currently, there are no major reasons for SoobuJang stocks to experience a sharp decline from a foreign investment or fundamental perspective, and while individual selling might occur at high points, it is not expected to lead to an overall decline.

It is also suggested that this week's Samsung Electronics preliminary earnings announcement and options expiration could trigger a market-wide rally, leading to a strong KOSPI rise after its previous underperformance.

Expert Lee Ji-hwan analyzed that along with infrastructure sectors, including steel stocks besides power, the trends of the US stock market should be closely watched.

He explained that attention should be paid to the impressive movements of cyclical consumer and infrastructure-related stocks in the US market during the holiday period.