September KOSPI Expected to Trade Sideways in Box Range

He explained, "The stock price didn't go up because of an influx of supply and demand from foreigners and institutions; rather, it was due to treasury stock repurchases, which, in a way, created a lower competition," adding that there is still insufficient confidence in the sustainability of this index rebound.

Regarding the September market outlook, Assistant Manager Lee Jae-gyu presented two contrasting views. The first is that Samsung Electronics and SK Hynix failing to recover the 120-day moving average could negatively impact the overall market. The second is that since the market has undergone sufficient correction over the past month, a technical rebound could naturally occur in September. He stated, "The first is... Samsung Electronics and SK Hynix haven't risen much... What's the second? Because it has undergone a lot of correction over the past month, won't it naturally rise in September?"

An analysis revealed that the probability of a September interest rate hike has risen significantly more than expected. Assistant Manager Lee Jae-gyu stated, "The probability of an interest rate hike in September was originally around 35%, but according to FedWatch, it has now risen to 55%," mentioning that this could act as a potential burden on the market. However, he added that the movement of U.S. long-term Treasury yields is still at a limited level.

Assistant Manager Lee Jae-gyu predicted a high possibility of the composite stock price index trading sideways, leading to active sectoral rotation. He advised investors to wait until their holdings have an opportunity for positive rotation, as fast rotation centered on large-cap stocks is expected due to liquidity shortages. He emphasized, "The composite stock price index is highly likely to trade sideways, with the possibility of sectoral rotation... I think it's necessary for you to wait until the stocks you hold experience a positive rotation by sector."

Assistant Manager Lee Jae-gyu commented, "Let's say institutions and foreigners, not individual investors, sold semiconductors... Then, which sector could even slightly mimic semiconductors? I can only think of secondary batteries." He explained that the large-cap-focused secondary battery sector is attractive, as institutions and foreigners can invest large sums of money there.

Assistant Manager Lee Jae-gyu pointed out that if large amounts of capital are invested in companies with small market capitalizations, ownership stakes can become excessively high, leading to liquidity or management control issues. He stated, "Institutions and foreigners don't invest in small-scale companies. To be precise, they can't. That's why I often say to focus on large-cap stocks," emphasizing that maintaining a large-cap-focused portfolio strategy is essential given their asset under management.

The 12-month forward P/R (Price-to-Earnings Ratio) figures for major semiconductor companies were disclosed. Assistant Manager Lee Jae-gyu revealed that Samsung Electronics was 4.4x, SK Hynix 4.1x, and Micron 6.5x, stating, "Even if they just follow Micron, their stock prices should rise by about 50% from now," suggesting that domestic semiconductor companies are relatively undervalued. However, he warned that if the macroeconomic environment deteriorates, downward pressure could also be exerted on semiconductor companies' stock prices.

Assistant Manager Lee Jae-gyu said, "When I look at semiconductors, there are two things. One is that the macro economy shouldn't break down," warning that Micron's valuation could drop to 4x if the macro environment worsens. He added that credit balance trends should be used as an important indicator for semiconductor investment to understand market capital flows.

The September market is projected to be a boring sideways market, yet with significant profit opportunities for individual stocks. Assistant Manager Lee Jae-gyu explained, "The decisive keyword is sideways, and what this sideways movement implies is a high possibility of positive rotation. Even if the composite stock price index doesn't climb to 7,000 or 8,000 points, individual stocks are likely to go up by 20% or 30%."

He stated that capital movement will be active from existing leading stocks to previously neglected sectors, emphasizing that in such a market environment, it is important to avoid chasing prices and instead target quality stocks during pullbacks.

He also predicted that rather than a sharp rise in the index, a market where specific sectors or stocks rise cyclically will unfold, advising investors to be patient and observe the market rather than acting hastily.

New trends in the U.S. Treasury market and the role of stablecoin issuers were mentioned. Assistant Manager Lee Jae-gyu stated, "I mentioned that stablecoin issuers hold a lot of U.S. Treasuries," explaining that if the U.S. pursues long-term Treasury buybacks and increases short-term Treasury issuance, stablecoin issuers could become the primary buyers.

This highlights the connection between the U.S. Treasury's debt management strategy and the cryptocurrency market, seen as a factor that could influence market liquidity.

Assistant Manager Lee Jae-gyu pointed out, "If this doesn't pass, the macro economy could become unstable. If the macro economy becomes unstable, the Korean market is also highly likely to become unstable." He believes that failure to pass the bill could lead to a 'weak sideways' market, where downward pressure might increase even in a sideways trend.

He said, "I've often stated that semiconductor top-tier companies would be better than semiconductor SooBooJang, but now I've mentioned that we should also consider semiconductor SooBooJang. Also, I used to view power equipment conservatively, but now I've stated that we should view it favorably," suggesting the possibility of capital inflow into these sectors from a positive rotation perspective.

Assistant Manager Lee Jae-gyu explained, "My investment opinion on power equipment turned more positive because, in the U.S. as well, bottlenecks are continuously forming, and power equipment has undergone sufficient correction, so won't it rise again?"

He mentioned that U.S. reliance on Chinese batteries in the transformer market reaches 59%, proposing that a buying strategy on pullbacks after a short-term rebound would be effective.

Assistant Manager Lee Jae-gyu stated, "There is a very high possibility of a shortage in the second half of 2027," presenting this analysis based on expert consultation.

This indicates that the secondary battery sector could become a significant target for the next rotation, following the semiconductor and power equipment sectors.

He explained, "The KOSPI appears highly likely to be confined to a box range. Being confined to a box range doesn't mean it's bad or a market where you can't make profits; it means there's a high possibility of positive rotation."

He announced his decision to reinvest all of the 30% cash secured last week today, revealing a portfolio allocation of 30% in semiconductors/power equipment, 25% in bio, 10% in secondary batteries, and 15% in neglected sectors. He advised against aggressive trading or chasing prices, recommending investment focused on positive rotation.