Market Variables Beyond Nvidia More Important Than Shareholder Return Policies

Lee Ga-ram, Manager at MBN Gold, emphasized that despite high market expectations for Samsung Electronics and SK Hynix's shareholder return policies, more critical market variables exist. He pointed out that it is time for the market to focus on new themes and variables beyond Nvidia, analyzing that larger movements beyond simple shareholder return policies will impact the market.

"From my perspective, there's something more important than shareholder returns. ... The important thing is not this. ... I told you there's something else important, and it's not even Nvidia."

In the past week, the KOSDAQ index plunged 7.2%, marking the largest decline among global stock markets. In comparison, the KOSPI fell by 0.9% during the same period, indicating a much more severe drop for KOSDAQ. Even looking at year-to-date returns, KOSDAQ is down 13% while KOSPI is up 6.4%, showing a widening gap between the two markets.

"The KOSDAQ index. It drops 7.2% in just one week. ... KOSPI was down -0.9% for the week, and KOSDAQ closed down -7.2% for the week."

The simultaneous surge in demand and issuance in the U.S. corporate bond market is exerting significant pressure on market interest rates. This is attributed to a supply-demand imbalance as substantial funds shift from U.S. Treasuries to the corporate bond market. Consequently, U.S. long-term interest rates (30-year at 5.3%) are rising, and corporate bond yields are also nearing 7%, intensifying the upward trend in interest rates.

"Corporate bonds are currently the biggest problem. Demand for corporate bonds is increasing too rapidly, and issuance is also increasing. ... Ultimately, there's a huge supply-demand shift of funds moving from U.S. Treasuries to this market."

Recently, in the U.S. market, semiconductor-related options trading volume has decreased, and a clear shift of funds towards the pharmaceutical and biotech sectors has been observed. Specifically, short-term positions are concentrated in the pharmaceutical and biotech ETF, XBI, showing a remarkable 30% increase compared to the average trading volume of the past three weeks. This can be interpreted as an important signal of a new supply-demand rotation in the market.

As the concentration in the semiconductor sector in the U.S. market eases, supply and demand are shifting to various theme stocks, including Bitcoin, aerospace, and quantum computing. This, combined with expectations of interest rate cuts, is contributing to spreading optimism across the overall stock market. This trend in the U.S. market is likely to lead to a rebound in KOSDAQ and strength in biotech stocks in the Korean market on Monday.

"Ultimately, the U.S. also saw a concentration in semiconductors, but as that concentration eases and interest rates fall, the stock market will improve, so let's just buy. This sentiment is becoming more prevalent."

The KOSDAQ index currently faces a situation where the index is not keeping pace with increasing credit balances. This indicates a mixed market sentiment with possibilities for both upward and downward movements. Technical indicators show signs of overbought conditions easing, suggesting a potential slowdown in the market. Therefore, close monitoring of future index movements is necessary.

"So, will the index go up again, or will it fall further and see these currently increasing balances decline again? We need to confirm this starting tomorrow."

The general assessment is that Samsung Electronics' shareholder return policy announcement was disappointing, contrary to initial expectations. Expectations were particularly high for a dividend-related announcement on Friday, but its absence led to disappointment. Experts analyze that Samsung Electronics' share buybacks are more for employee compensation than enhancing shareholder value, with conflicting evaluations from foreign brokerages Citi and JP Morgan.

"Originally, expectations for a dividend-related announcement on Friday were high. But it didn't come out. So what does that mean? Disappointment is starting to build regarding this as well."

Foreign brokerages offered conflicting assessments of Samsung Electronics' shareholder return policy. Citi Securities gave a positive evaluation, analyzing that Samsung Electronics could structurally transition to high dividends. In contrast, JP Morgan noted that while the scale of shareholder returns met expectations, the content, such as the absence of share cancellations, fell short of market expectations. This suggests a disconnect between the per-share value enhancement shareholders desire and the company's realistic regulatory constraints.

An analysis suggests that Samsung Electronics' stock price determination relies more on fundamentals, HBM competitiveness, and foundry performance improvement than on shareholder return policies. JP Morgan and Morgan Stanley evaluated Samsung Electronics' shareholder return policy as falling short of market expectations, pointing out that share buybacks are largely for employee compensation. Ultimately, the dominant opinion is that Samsung Electronics' stock revaluation depends on whether future large-scale return plans are actually monetized.

"Ultimately, what's more important than shareholder returns is the market's direction."

While the short-term supply and demand concentration on SK Hynix is accelerating, an analysis suggests that Samsung Electronics and SK Hynix will ultimately move in the same direction according to market trends. Manager Lee Ga-ram implied that even if SK Hynix significantly increases purchases, it would be difficult to completely deviate from Samsung Electronics' trend, suggesting that SK Hynix's upward momentum may be limited.

"No matter how much Hynix increases its purchases starting tomorrow, it will still have to follow Samsung Electronics' trend."

An analysis suggests that individual company fundamental positive news is already widely known market material, and what truly affects stock prices is the overall market direction. Only when the major market trend is decided can individual company positive news be fully reflected in stock prices. Therefore, Manager Lee Ga-ram emphasized that reading the bigger market picture is more important than individual stocks.

"Ultimately, what's more important than shareholder returns is the market's direction."

The market is currently showing a strong wait-and-see attitude ahead of major events such as the Iran sanctions announcement, U.S. Treasury auction results, and Nvidia's earnings release. As the direction of the U.S. stock market is still unclear, a generally cautious atmosphere is expected to prevail this week. This uncertainty could increase market volatility, so caution is advised for investments.

"This hasn't come out yet, so it could be a factor for a wait-and-see approach."

U.S. 10-year Treasury yields continue to rise, putting downward pressure on the stock market. Rising interest rates generally have a negative impact on the stock market and will act as a key variable for future market trends. Whether the 10-year yield has entered an overbought zone is currently important, and this is expected to be a major indicator in determining whether the stock market will fall further.

"The 10-year yield isn't breaking. It keeps going up."

Samsung Electronics' current stock price is expected to maintain a trading range between 240,000 and 280,000 won. If the stock price falls further and enters the 240,000 won range, approaching it from a low-point buying perspective would be effective, according to the analysis. Furthermore, Manager Lee Ga-ram stated that strong momentum is needed to break through the upper cloud when entering it, and confirming the downside support level at the current stock price is important.

"It has come down, but if it goes down further and reaches here, then around 240,000 won seems appropriate, I think. Then it will try to find its direction again."

SK Hynix's stock price decline is expected to be limited due to the impact of its share buybacks. Manager Lee Ga-ram judges SK Hynix to have support between 1,650,000 and 1,700,000 won, analyzing that it will move within a narrower trading range unlike Samsung Electronics. He also added that it could rebound if interest rates and oil prices fall.

"Its own buying is very strong. So the stock price decline will be limited. Then, unlike Samsung Electronics, it will have a narrower trading range, and the bottom will be capped."

Expectations are building that U.S. market momentum will lead to improved supply and demand for domestic biotech stocks. Particularly, whether Altium breaks through 350,000 won appears to be key to its future stock price movement. Manager Lee Ga-ram suggested a short-term response strategy utilizing KOSDAQ 150 leveraged products, forecasting that the strength of U.S. biotech stocks will influence the domestic market.

"Since the U.S. has also come back up, if biotech turns around again in Korea tomorrow, I think we can expect Altium to go up first."

This week, the market is expected to repeat rises and falls depending on fluctuations in interest rates and oil prices. Manager Lee Ga-ram advised that in such an environment, a rapid rotational trading strategy utilizing theme-based stocks like Bitcoin would be effective. He added that for large-cap stocks, it is advisable to maintain a box trading strategy, buying when the market falls.

"Ultimately, I think this week will be a week of short-term rotational trading and short-term themes."

Domestically, with the President's approval rating falling to a significantly low level, there is a possibility that policy-related news will emerge towards the end of August or September. Manager Lee Ga-ram mentioned that a short-term response strategy can be formulated based on these potential policy changes. He emphasized the importance of proactively identifying institutional and corporate net buying information, adding that the impact of domestic issues on the market should be closely watched.

"Domestically, the President's approval rating is quite low. It has dropped significantly. Therefore, news might start coming out in late August or September."