Will the Stock Market Rise Again After the US Midterm Elections?

Interest rate issues have been identified as the main reason for the correction in U.S. tech stocks. Furthermore, geopolitical risks that emerged on the 30th added additional pressure to the market, raising concerns about passive capital outflows.

CEO Ha Chang-wan explained, "The background for the correction in U.S. tech stocks was partly due to interest rates. And on the 30th, news of geopolitical risks further exacerbated the situation, causing some burden," emphasizing market instability in the tech and semiconductor sectors.

Currently, the U.S. 10-year Treasury yield is at 4.72%, and experts are predicting it could rise to 5%. This increase in interest rates could stimulate a preference for safe-haven assets, negatively impacting the stock market.

CEO Ha Chang-wan stated, "The 10-year yield has risen to 4.72, and although views differ, many believe it could go up to 5%," warning of further interest rate hikes.

Customer deposits, which are standby funds in the domestic stock market, have fallen below 100 trillion won, increasing supply and demand instability. At the same time, the KOSPI credit balance is rising, raising concerns about potential selling pressure during a future correction.

CEO Ha Chang-wan pointed out, "First, the standby funds in the stock market are very low. Yes. Deposits have fallen below 100 trillion won and are continuously decreasing. And credit is increasing, so if deposits decrease and credit also decreases, it could lead to selling pressure during a correction," warning of potential market risks.

Regarding semiconductor investments, CEO Ha Chang-wan suggested short-term trading by adjusting portfolio weighting by 5-10% to capitalize on volatility. Conversely, for the long term, he recommended a strategy of holding until macro risks are resolved, as the issue is not a structural problem of the semiconductor industry.

CEO Ha Chang-wan advised, "If you've invested 50% in semiconductors and the market sentiment is bad, you need to reduce your position by about 5% or 10%, and then buy more when the price drops slightly. If you've never done that and don't want to, then you just have to wait." He added that the current situation is not an inherent problem of the industry, so it can rebound once macroeconomic risks are resolved.

CEO Ha Chang-wan emphasized historical data showing that the stock market has always trended upwards after U.S. midterm elections, anticipating continued growth in the semiconductor and artificial intelligence (AI) industries from a long-term perspective.

CEO Ha stated, "The U.S. market has never been bad after midterm elections. It's good after midterm elections. It can be good. The probability of it being good is high. Because the U.S. has never had a bad market after midterm elections." He explained that this historical pattern supports a positive long-term outlook despite current market instability, and predicted that the development of new technologies like AI would drive continuous growth in the semiconductor industry. Therefore, he added, it is important for investors to focus on long-term growth potential rather than being swayed by short-term volatility.

Defense stocks tend to rise when geopolitical risks intensify and investor sentiment weakens when peace treaties are discussed. The market does not simply view defense stocks through the lens of defense spending issues but reacts sensitively to changes in international affairs.

CEO Ha Chang-wan explained, "Inevitably, if geopolitical risks strengthen, defense stocks will rise, and if there's talk of a peace treaty, investor sentiment will naturally slow down," mentioning the volatility of defense stock investments.

For Hanwha Aerospace, whether the stock price breaks through the ₩1.28 million to ₩1.30 million range is crucial. If it successfully breaks through this range, an upward movement to the ₩1.40 million range could open up. Currently, its short-term attractiveness is low, making it a wait-and-see period for new buyers.

CEO Ha Chang-wan analyzed, "The upward movement will largely depend on whether it breaks through ₩1.28 million to ₩1.30 million," emphasizing the importance of this range.

For cosmetics stocks, breaking through key resistance levels is essential for ensuring continuity. If these resistance levels are successfully breached and new highs are recorded, continuous upward momentum in stock prices can be expected.

CEO Ha Chang-wan said, "If it breaks through, you can set that as your profit-taking point and just keep holding," suggesting a strategy of taking profits after breaking resistance and following the trend.

Stock price volatility is expected at the end of August due to month-end rebalancing. Particular caution is needed for program trading and passive flow stocks, and there's a possibility of a rollback effect tomorrow for stocks that saw sharp gains or losses today.

CEO Ha Chang-wan mentioned, "Tomorrow, there might be some rollback in stocks that fell sharply or rose significantly today," emphasizing that investors should prepare for market movements due to month-end rebalancing.

Many forecasts suggest the KRW/USD exchange rate will fall to the ₩1,350 level. However, CEO Ha Chang-wan emphasized the need to prepare for the possibility of the exchange rate rising again.

CEO Ha Chang-wan said, "But many are predicting it will fall to the ₩1,350 range. So you can refer to that, and I think it will go up again," pointing out the uncertainty in the exchange rate market. He added that investors should not only focus on short-term decline forecasts but also consider the possibility of an exchange rate rebound.

While maintaining a conservative stance on the market, one should prepare for strong buying opportunities in case of significant short-term dips. Federal Reserve statements can change quickly based on data, so investors should monitor shifts in Fed officials' stances around monthly data release times.

CEO Ha Chang-wan emphasized, "We need to take a conservative stance. Let's prepare for one last strong bet when there's a short-term dip."

For Samsung SDI, as of today, support at ₩580,000 is key for a short-term upward breakout. If ₩580,000 holds, a rise to the mid-to-high ₩600,000s can be expected, though an upside of around 10% is appropriate.

The recent influx of capital due to expectations of a secondary battery rebound needs to be absorbed, and an immediate response is required if ₩580,000 is breached. CEO Ha Chang-wan explained, "As of today, ₩580,000 needs to hold. If ₩580,000 doesn't break, you can expect to see the mid-to-high ₩600,000s, but it's appropriate to view the upside at around 10%," outlining the investment strategy.

Share buybacks act as a buffer, firmly supporting the downside and defending against declines rather than leading to sharp stock price increases. This creates an effect where selling pressure from emotionally unsettled individual investors subsides as the resistance levels are absorbed.

CEO Ha Chang-wan explained, "There's an opinion that it becomes prey for those who short sell, but it definitely plays a role in propping up the downside. It makes the downside incredibly firm," emphasizing the positive aspects of share buybacks.

For HPSP, a technical approach at the current price is ambiguous. It is safer to enter after confirming a clear breakthrough of the ₩57,000 to ₩58,000 range, as this would align the moving averages in an upward trend, opening up upside potential.

CEO Ha Chang-wan advised, "It's a bit ambiguous to approach right now. It would be better to consider it when it clearly breaks through the ₩57,000 to ₩58,000 range. At that point, the moving averages will also clearly align in an upward trend." If further decline occurs from the current level, support at ₩43,000 should be monitored.