Despite Individual Selling, Leveraged Investment Increased

Foreign investors are maintaining a large-scale buying position of 40,000 contracts in the futures market. This volume is difficult to liquidate in just two days, raising the possibility of it being accompanied by spot sales.

Hwang Yu-hyun, Team Head, emphasized the weight of foreign futures positions, stating, "To pay back means that the 10 trillion won worth of futures bought so far cannot be sold off in two days." Large futures positions can act as a major factor in expanding market volatility.

The current stock market is heavily driven by foreign investors' supply and demand. There is a clear tendency for an immediate index drop when foreign buying ceases.

As Hwang Yu-hyun, Team Head, stated, "Currently, the leadership in supply and demand has completely shifted to foreigners. When foreign buying stops, the market falls." Foreign investors are leading the market with concentrated buying in specific sectors like semiconductors and AI. This concentration suggests that the entire market could be significantly shaken by changes in foreign supply and demand.

The market impact of the recently unveiled AI service Astra is drawing attention. Astra is being praised for "creating demand that didn't exist" through its intuitive user interface (UI) and innovative feature implementation.

Hwang Yu-hyun, Team Head, explained Astra's influence, saying, "The phrase 'creates demand that didn't exist' seems perfectly fitting. This time, Astra just hit the homepage intuitively." This can heighten the perceived experience of Artificial General Intelligence (AGI) and create new investment opportunities across related industries.

This means it is more sensitive to broader macroeconomic changes, beyond news related to the Middle East and interest rates.

Hwang Yu-hyun, Team Head, explained, "The foreign supply and demand itself has already put the KOSPI into the global tier, causing Japan and Taiwan to be pushed together," emphasizing that global market trends now have a greater impact on the domestic stock market.

Individual investors tend to shift from a selling attitude to long-term investment once they reach profitability. However, when a decline appeared in the afternoon session, this investment sentiment rapidly weakened.

Hwang Yu-hyun, Team Head, described the change in individual investors' sentiment: "When I called them, saying they had reached profitability and asking if they would sell the stock at this price, their attitude changed. They said, 'I'll invest long-term. This was originally a stock I bought for long-term investment, so I'll invest long-term.'"

Recently, even as the index sharply surged by nearly 4-5%, the volatility index (VKOSPI) unexpectedly jumped to the 47-point level. This indicates that the market harbors high uncertainty and risk.

Hwang Yu-hyun, Team Head, mentioned, "Yesterday, the index surged by nearly 4-5%, but the volatility index also surged yesterday and today. It went up to 47." He warned that the volatility index entering the 40s is a major risk factor for the market. While the volatility index typically rises during market downturns, its concurrent rise with a surging index can be interpreted as a market warning sign.

During past stock market booms, the credit balance was 38 trillion won with deposits of 140 trillion won, making the credit balance ratio in the early 30s. However, despite the current credit balance decreasing to 33 trillion won, its ratio to deposits has actually risen to 35%.

Hwang Yu-hyun, Team Head, pointed out, "So the credit balance ratio divided by the deposit ratio was in the early 30s. But now, what is it? This alone is 35%," indicating that the market now carries an approximately 40 trillion won burden of leveraged holdings compared to the past.

Leveraged holdings, which had decreased to the early to mid-5 trillion won range last week, recently re-entered the 5-6 trillion won range thanks to the rise in Hynix Electronics. While leveraged ETFs are not subject to forced liquidation, market downturns can inevitably lead to selling pressure, adding further downward pressure on the market.

Hwang Yu-hyun, Team Head, explained, "Last week, it decreased to the early to mid-5 trillion won range, but this week, with the rise of Hynix Electronics, it has probably increased again to the early 6 trillion or late 5 trillion won range," expressing concern about the accumulating burden of holdings within limited funds. These toxic holdings can act as a potential risk, further increasing market volatility.

Major investment institutions like Goldman Sachs analyze that stock buybacks are currently supporting the market's downside. However, concerns about downward pressure on the market are growing as it's been confirmed that these buyback volumes are rapidly being depleted.

Seo Su-jin, Team Head, mentioned, "Goldman Sachs and others are saying that stock buybacks are providing some downward support. But apparently, this is being depleted quickly," raising questions about how individual investors' relief will change if the effect of stock buybacks diminishes.

Mid-October, approximately two weeks before the U.S. midterm elections, presents high uncertainty regarding the market environment. Analysis suggests that whatever issue emerges at this time, it will likely be either in a resolution phase or at an extreme peak, such as war.

Hwang Yu-hyun, Team Head, projected, "At that time, mid-October will be about two weeks before the midterm elections, so whatever issue erupts, I think it will be one of two things: either in a phase of resolution or at an extreme peak, whether it's war or something else," emphasizing the importance of holding cash in preparation for continued volatility.

Therefore, advice suggests that a 'pongdang-pongdang' strategy, selling rapidly rising stocks and targeting low-point stocks like secondary batteries or cosmetics, is effective.

Hwang Yu-hyun, Team Head, emphasized, "Concentration means there's no trading volume. There's no more money to come in. If I buy there, there's a high probability I'll become a volume catcher. Conversely, now is the time to slowly pick up secondary batteries or cosmetics that have been hit. You can go back and forth like this, 'pongdang-pongdang'."

Hwang Yu-hyun, Team Head, emphasized, "This GPT Astra version is a model that strongly makes me want to cancel the existing one and switch to this. If you steadily accumulate infrastructure like power and power lines rather than hardware, the day will come when you can sell them."

This implies that nuclear power is emerging as an essential infrastructure industry for the AI era, beyond just a policy stock. As electricity demand surges, the stability of energy supply becomes crucial, and related infrastructure investment is expected to become a long-term theme.

As individual investors increasingly use AI, the commonization (concentration) of investment stocks is intensifying, which could lead to the disappearance of individual stocks. The method of trading fragmented stocks is no longer effective.

Hwang Yu-hyun, Team Head, emphasized, "Individual stocks no longer exist. As investors use AI more, recommended stocks have all become common. The old way of trading fragmented stocks no longer works. You have to play within the main stocks."

The development of AI technology is making investors' stock selections similar, and the market is expected to increasingly move around a few large-cap stocks. Therefore, investors need to formulate a large-cap-centric strategy in response to these changes.