Foreign Selling Intensifies, KOSPI on Brink of Correction Storm

After the holiday, strong selling by foreign and institutional investors led to an overall downward trend in the domestic stock market. CEO Lee Ju-hyeon explained, "After the holiday, foreign and institutional selling has been strong today, leading to an overall downward trend."

US bond yields exceeding 5.2% burdened the domestic market, and a strong wait-and-see sentiment prevailed ahead of this week's US Personal Consumption Expenditure (PCE) inflation data release. Additionally, variables related to US-Iran negotiations concerning the Strait of Hormuz and portfolio adjustment demands at the end of September are also analyzed as factors influencing the domestic market correction.

Within semiconductor stocks, Samsung Electronics and SK Hynix showed differentiated trends. Before the holiday, Samsung Electronics saw a strong influx of buying, while SK Hynix consistently experienced selling.

This is interpreted as an adjustment in stock-specific balancing rather than an overall increase in semiconductor weighting. Some investors appear to be attempting to reduce their portfolio weighting due to rising semiconductor prices.

CEO Lee Ju-hyeon predicted that big tech companies' CAPEX investment would reach approximately 830 billion dollars this year, with a further increase to 1.1 trillion dollars next year.

Such large-scale investment is creating continuous upward momentum in the market, and as long as companies' earnings momentum is maintained, a buy-the-dip strategy remains effective.

With moving averages clustered, the market's direction is expected to be determined soon. CEO Lee Ju-hyeon stated, "As long as companies' earnings momentum does not disappear, the strategy of buying on dips and selling at the top of the box range will continue to be effective."

It is judged that as long as corporate earnings momentum does not disappear, market corrections should be utilized as buying opportunities, and a selling strategy is effective at the upper end of the box range. For long-term investors, a strategy of buying on dips and holding is also valid.

Currently, provisional corporate earnings forecasts are trending lower compared to market consensus. In some cases, earnings initially expected to exceed 110 trillion won are now being mentioned as below 100 trillion won.

Various factors, including exchange rate issues, are analyzed to have influenced these downward revisions of earnings forecasts.

Considering Micron Technology's stock price trend, foreign investors' cross-trading of Samsung Electronics and SK Hynix is understood as portfolio rebalancing. Concerns about Q3 earnings due to a weaker exchange rate are offset by rising semiconductor prices. Given the upward trend in Micron Technology's stock price in the US, there is insufficient basis for negative forecasts regarding the overall growth potential of the semiconductor industry.

While concerns about Q3 earnings due to a weaker exchange rate were raised, rising semiconductor prices are deemed to be offsetting these concerns.

Former US President Trump expressed a negative stance on AI development regulations, wary of falling behind in AI investment. He emphasized that AI investment is essential for maintaining US national hegemony.

With the proven utility of AI in recent conflicts, its importance in future battlefields is expected to further increase. This is underpinned by the recognition that securing AI competitiveness is crucial for the US to maintain its global leadership.

The total selling of 3.4 trillion won led to a sharp decline in the domestic stock market.

Compared to global market conditions, the phenomenon of our market falling particularly sharply suggests instability in domestic investor sentiment or the impact of month-end portfolio adjustments. Meanwhile, with Samsung Electronics and SK Hynix's continued share buybacks, downside rigidity has been partially secured.

Medical AI-related stocks gained momentum by actively moving beyond the limitations of the domestic market to enter overseas markets. Key stocks like 3billion surged by 25%, showing strong performance.

This is analyzed as a technical rebound occurring after returning previous gains and undergoing sufficient price correction, with expectations for overseas market expansion positively impacting stock prices.

Medical AI is attracting market attention, being evaluated as ahead of physical AI in terms of practical adoption and profit generation. Expectations for earnings are being reflected, centered on trusted companies like Lunit.

With KOSDAQ showing stronger performance than KOSPI, a rotational trading pattern emerged, highlighting small-to-mid cap theme stocks. In the semiconductor sector, theme stocks with high future growth expectations, such as CXL, are showing strength rather than value stocks.

As the market underwent a correction after attempting to break the upper bound of its box range, a rotational trading pattern unfolded. Substrate and SooBuJang-related stocks, such as LG Innotek and Korea Circuit, showed stronger performance than the overall market. LG Innotek, Korea Circuit, and other substrate-related stocks showed an upward trend.

As the market goes through a box range correction, a rotational stock-specific market is unfolding, with substrate-related stocks receiving price momentum in sequence.

In conjunction with AI infrastructure investment and the power shortage problem, the renewable energy and nuclear power sectors showed strength. AI-related themes broadly expanded, with glass substrate-related stocks like P-Optics also showing an upward trend.

The rotational trading market expanded to various sectors such as food & beverage, banking, and shipbuilding equipment, continuing a trend where stocks that had not previously risen are now receiving trend-driven price momentum.

The merger of SK Innovation and SK E&S and the effect of expanded energy refining margins also had a positive impact.

SK Innovation and SK E&S, among others, showed new high trends, increasing expectations for energy companies' earnings. As long as oil prices do not plummet, the earnings momentum of energy-related stocks is expected to continue.