Kospi Rebounds on Foreign Futures Buying…Rotation Spreads from Semiconductors to Nuclear Power and Reconstruction

Foreign investors strengthened their buying positions in the futures market, leading to a rise in the Kospi index. This foreign buying played a decisive role in setting the overall market direction during the day. The main focus of the market this week will be whether Kospi can firmly break through and settle above the 120-day moving average.

A rotational trading pattern has emerged, with investment funds that were previously concentrated in large-cap semiconductor stocks like Samsung Electronics and SK Hynix now spreading to other sectors. Buying has flowed into nuclear power, construction, and food stocks, as well as KOSDAQ stocks like Pharmaresearch, indicating a shift in market-leading sectors. This suggests that the concentration in specific industries is easing.

In the current market, short-term strategies of selling on rallies and buying on dips, typical of a sideways market, may be risky. Experts analyze that the current market is likely to establish a clear direction rather than remaining in a sideways trend. The future direction of the index depends on the resolution of war-related risks and a decline in long-term interest rates, requiring a cautious approach while monitoring these factors.

Hyundai Motor announced a plan to fully cancel approximately 800 billion won worth of treasury shares at its Investor Day. However, this amount, less than 1% of Hyundai Motor's market capitalization, significantly fell short of market expectations. Furthermore, regarding the robot business, no concrete new strategies or timelines were presented beyond previously announced details, increasing investor disappointment.

Notably, there was no mention of a Boston Dynamics IPO, and specific details about the robot business were lacking. Adding to this, the approximately 800 billion won share buyback amount was below market expectations, and the fact that the disclosure was released at 1:52 PM, before the event even began, also negatively impacted investor sentiment.

The stock began to decline at 1:57 PM, even before the content of the presentation was revealed, and the sell-off intensified while the opening remarks were being made as the event started at 2:00 PM. This is interpreted as a pre-emptive reflection of concerns that market expectations would not be met. Investors divested their shares regardless of the presentation content.

Nvidia's revenue and EPS (Earnings Per Share) are expected to exceed market forecasts with over a 96% probability, indicating a surprise. However, these high expectations are already largely priced into the stock, leading to a widespread perception of 'best case, break even.' In the long term, concerns about a potential slowdown in Nvidia's growth rate are also being raised, suggesting that the stock's direction after the earnings announcement will be determined by a complex interplay of factors.

OpenAI announced its self-developed inference chip, creating a new competitive dynamic for Nvidia. OpenAI claims to have surpassed Nvidia in the inference domain, which can be interpreted as a challenge to Nvidia's market dominance. In this situation, how Jensen Huang, Nvidia's CEO, responds to the ASIC (Application-Specific Integrated Circuit) chip competition will be a crucial variable for Nvidia's future stock price and market share.

Nvidia, which previously enjoyed a near 90% monopolistic market share, mentioning a realistic target is interpreted as a remark acknowledging intensifying competition. As new competitors enter the AI chip market, the market structure may change.

Jeonjin Construction Robot's stock surged as expectations for the end of the war grew, leading to an inflow of demand into reconstruction-related stocks. In particular, the company secured technological momentum by successfully demonstrating its concrete distribution robot. This technology is considered an essential element for future reconstruction projects, and the expectation that it can play a significant role in post-war recovery efforts seems to be reflected.

Particularly, its strong partnership with Saudi Aramco increases the potential for business expansion in the Middle East. Currently, with a market capitalization of 580 billion won and an estimated operating profit of 130 billion won this year, along with anticipated growth next year and the year after, the valuation burden is low. Its business growth potential and low valuation are analyzed as factors enhancing its investment appeal.

Samsung E&A directly participated in the construction of the CFP plant in Kuwait in 2014, leading to observations that its chances of winning this restoration project are high. Stocks that hold both nuclear power and reconstruction themes simultaneously are garnering particular attention in the market.

Department store-related stocks are showing a rotational trend from a low PBR (Price-to-Book Ratio) perspective. These stocks generally experienced poor earnings in the second quarter, leading to downward pressure on their prices, but are expected to recover starting from the third quarter. While second-quarter earnings were not as good as the first quarter, it is projected that they will rebound in the third quarter, returning to second-quarter levels. This perception of having passed the earnings bottom, combined with highlighted undervaluation appeal, is attracting investor interest.

Attacks on refinery facilities and operational disruptions are exacerbating global supply shortages. This situation contributes to maintaining strong refining margins. Additionally, with the seasonal period for accumulating heating oil inventories approaching, there are expectations of increased demand. Therefore, analysis suggests that the temporary decline in refinery stocks due to falling oil prices and reconstruction expectations should be seen as a buying opportunity.

While recent oil price declines have raised expectations for Korean Air to benefit, concerns about the Bank of Korea's potential interest rate hike and resulting consumption contraction persist. Furthermore, even if oil prices fall, strong refining margins could keep jet fuel costs high. Therefore, a cautious approach to investing in Korean Air is advised, considering its high volatility.

SK Telecom is regarded as a company with high growth potential, focusing on its data center operation business. In particular, the possibility of SK Innovation (SK On) participating in data center operations has been mentioned, leading to expectations of synergies with group affiliates such as SK E&S. These connections could serve as new growth engines for SK Telecom, and it is suggested that it should be observed with interest from a long-term perspective.