September Rate Freeze Possibility Rises… Money Flow is Key

Christopher Waller, a governor at the U.S. Federal Reserve, suggested the possibility of a September interest rate freeze. Governor Waller noted that while inflation remains high, there are signs of price stability, such as a slowdown in core inflation over the past three months. He stated that if this trend continues, he would support a rate freeze at the September Federal Open Market Committee (FOMC) meeting. Immediately after his remarks, the three major U.S. stock indexes rose by over 1%, positively impacting the market.

In the U.S. market, the top 1-3 stocks by market capitalization are nearing new highs, maintaining a solid trend. This is interpreted as leading stocks from the past once again dominating the market. Conversely, the semiconductor sector, which had led the market for some time, is showing relative weakness, indicating that capital flow is shifting towards these established market leaders.

The spread of artificial intelligence (AI) technology is expanding from infrastructure to services and software. While AI infrastructure-related companies previously saw significant gains, recently, software and cloud service companies that leverage AI to generate actual profits are gaining prominence. This indicates that AI technology is moving beyond 'chasm' concerns to tangible products and services, leading to a shift in the market's leading sectors.

The weakness in the semiconductor sector is attributed to an already saturated supply. In the past, rising prices led to increased demand and strong buying momentum, but now the necessary quantities have been met, and additional institutional investment is not flowing in. This situation has led to the semiconductor sector being marginalized from leading stocks, continuing a sluggish trend. This phenomenon appears to be caused by the overall flow of capital in the market shifting to sectors other than semiconductors.

After market close, a large-scale block deal (after-hours bulk trading) occurred in POSCO International and POSCO DX. Other corporate entities were confirmed to have disposed of approximately 1.5 trillion won worth of shares through block deals. This may lead to short-term volatility in the stock prices of related companies.

The Nikkei 225 index dropped from +101 points to -400 points, and South Korea's KOSPI index also plummeted nearly 4%, from +1.83% to -1.8%. This is believed to have been triggered by algorithm-driven selling originating from foreign sources, causing a significant shock across the market.

The recent strengthening of the Korean won has amplified translation losses for domestic investors. For example, investing in U.S. stocks could result in a 10% loss when converting dollars back to won due to the stronger won. This appreciation of the won triggered automatic, mechanical selling in the derivatives market, and combined with defensive selling from institutional investors, led to an instantaneous sharp decline, causing significant shock to the market.

A dovish Fed official hinted at a rate freeze. This official stated that signs of inflation slowing down are appearing, and if this trend continues, he would support a rate freeze at the September Federal Open Market Committee (FOMC) meeting. He added that delaying an interest rate hike by one time would not pose a significant risk to addressing inflation. These remarks have raised expectations for a September rate freeze in the market, serving as a positive signal.

The 10-year Treasury yield was 6% just before the IT bubble burst in 2000, and 5.3% just before the housing bubble burst during the 2007 global financial crisis. Citing these historical examples, it was emphasized that the current 4.8% interest rate level is by no means safe, and a conservative approach to the market is necessary.

This means that market interpretation is paramount, and one should follow the trends the market demonstrates. If positive news emerges but stock prices do not rise and selling occurs, a decline is likely. Therefore, ignoring market signals and sticking solely to one's own judgment is risky. It was suggested that rather than fighting the market, it is crucial to invest flexibly in line with market trends.

The current market is characterized by rapid sector rotation driven by supply and demand, without a specific leading sector. While many sectors such as insurance, shipbuilding, construction, machinery, and steel are showing simultaneous increases, individual issues exist for each sector, but a continuous leading theme is absent. This suggests that the speed of rotation is accelerating for both individual and institutional investors, making it more important to read short-term supply and demand flows rather than identifying specific stocks for long-term investment.

Markets tend to converge to a single point through various technical patterns such as ascending triangles, descending triangles, and wedges. After such convergence, an inflection point invariably occurs, leading to a new direction. The current market's resilience in resisting downward pressure suggests that the inflection point after convergence may be upwards. While it's impossible to definitively say whether it will go up or down, the market's robustness can be interpreted as a positive sign.

With the top three leading stocks in the U.S. market nearing historical highs, the rise of AI-related service platforms could also impact the Korean manufacturing market. When formulating market trading strategies for next week, attention should be paid to these shifts in capital flow and sector differentiation.

This indicates Samsung Electronics' substantial progress in the HBM market. While SK Hynix still maintains the top position, Samsung Electronics' rising market share can be interpreted as an overall strengthening of the competitiveness of the domestic semiconductor industry.

It is recommended to set investment strategies by considering an approximately 30% possibility of additional interest rate hikes by the Federal Reserve (Fed). The remaining cash can be effectively used for short-term trading of individual stocks. This is because individual stocks are currently highly active, offering many short-term profit opportunities. However, if short-term trading is deemed difficult, it is advised to avoid aggressive investments and adopt a wait-and-see strategy.

APR maintains that it was affected by counterfeits and is monitoring the impact of this situation on the cosmetics sector as a whole. The company is also reportedly considering countermeasures against the spread of false information.