September Rate Hike: Can AI Sustain the Market?

In the first half of the year, individual purchases of semiconductors amounted to 190 trillion won, while financial investment recorded 53 trillion won. Approximately 80% of the recent increase in ETF AUM is estimated to be related to semiconductor supply and demand.

Generally, during periods of share buybacks, stock price increases have been limited. This is because the burden on the entity buying back shares increases as prices rise, requiring them to purchase at higher prices. The supply-demand characteristic where a rush of selling volume emerges whenever buying pressure is injected also contributes to this phenomenon.

The recent decline and sluggish rebound in the domestic stock market are analyzed as side effects of the sharp rise and fall in July. There is also a view that the original fair price is above the current price level, and individual investors' selling to recover principal continues. It is expected that more time will be needed to resolve these side effects.

The trends of the three major US indices show a differentiated pattern. The S&P 500 rose, then moved sideways, and eventually set a new historical high. In contrast, the Nasdaq remains below its record high, and the Dow Jones Industrial Average continues its decline, falling below its previous low. This disparity is attributed to the concentration in tech stocks driven by the artificial intelligence (AI) momentum.

AI is gaining attention as a growth sector that can consistently generate profits, forming strong investment momentum even amidst market instability.

Factors contributing to inflation include rising oil prices and ongoing wars. These factors delay price stability, burdening the market.

There are also predictions that the timing of price stability will be further delayed as the 'Trump risk' is increasingly highlighted before the midterm elections.

Investors are pinning their hopes on the profit growth potential of AI-related companies amidst these macroeconomic uncertainties.

When growth rates are high, high interest rates can be maintained, but it is generally natural for market interest rates to fall along with declining growth rates. Unlike previous generations, the current generation cannot accumulate wealth solely through bank interest, and as economic growth slows, market interest rates naturally follow a downward structure.

Interest rate levels from the past and present should not be simply compared. The current trend of interest rate hikes is increasing concerns about corporate debt defaults. In particular, the extended period for profit recovery compared to AI investments is pointed out as the core of the 'bubble theory'.

If interest rates reach 4.25% and profitability is not proven next year, many companies are likely to face a crisis. This could have serious impacts on actual business operations, beyond just financial market instability.

Concerns are also raised that Korea, too, could face increased debt burdens for corporations and households due to the rapid interest rate hike trend.

While large corporations have relatively low default risk, the possibility of SME defaults is analyzed to be very high. In past financial crises, US authorities managed situations by supplying liquidity, but in the current situation, smaller businesses may face greater difficulties. Market shock is inevitable, and investors need to prepare for such volatility.

Even if an interest rate hike is implemented in September, the market may assess it as a preemptive measure and stabilize. A decline in bond yields could be a positive signal for market stability, and investors should use such market changes as an opportunity to re-examine their portfolios. A strategy is needed to utilize the stabilization period as an important timing for portfolio realignment.