U.S.-Korea Tensions: Impact on Korean Stock Market?

On September 9, the KOSPI closed up 1.4% at 2,551.64 points, an increase of 97 points from the previous day.

The index, which climbed above the 2,500 mark for the first time in a while, was primarily driven by gains in the electrical and electronics sectors.

This strength in KOSDAQ was driven by robust gains in semiconductor equipment and secondary battery stocks.

Wonik IPS, EO Technics, Leeno Industrial, HPSP, and Jusung Engineering were among the top market capitalization companies, recording significant gains.

The Japanese yen is currently hovering around 153 yen, showing a different strengthening trajectory compared to past intervention times.

Along with the strong yen, the yuan and won are also continuously strengthening, indicating a general strengthening trend across major Asian currencies.

This is analyzed as reflecting overall stabilization in Asian markets and expectations for changes in the external economic environment.

This suggests a high probability of an increase at the next interest rate decision, indicating that the Korean bond market has already priced in the possibility of interest rate cuts.

The cumulative selling by individual investors from last week to this week is considered unprecedented.

This strong selling trend was concentrated on key semiconductor stocks like Samsung Electronics, suggesting that individual investors are feeling skeptical about the stock market.

However, excluding Samsung Electronics and SK Hynix, the operating profit margin sharply drops to 7.2%, indicating a significant gap between macroscopic indicators and actual sentiment.

Notably, CATL is on the U.S. Department of Defense's blacklist, indicating an intensifying U.S. government crackdown on China.

Controversy has arisen over Ford's use of CATL-licensed battery technology at its Michigan plant.

Furthermore, Ford's reversal of its decision to move Lincoln Nautilus production from China to the U.S. by 2030 has led the U.S. government to worry that Ford will become entirely tied to China.

Chinese companies have accounted for over 50% of global semiconductor equipment demand in the past three years, rapidly increasing their domestic production capacity.

Yangtze Memory also announced plans to expand its NAND production from 200,000 to 400,000 wafers per month through the expansion of its Wuhan plant.

These large-scale expansion plans by Chinese memory semiconductor companies raise concerns about a potential decline in DRAM prices in the future.

Currently, Chinese HBM (High Bandwidth Memory) shows limitations in implementing TSV (Through-Silicon Via) technology in its process, resulting in low yields.

In contrast, DDR general-purpose semiconductors, which are the material for HBM, have succeeded in mass production, raising concerns about a decline in profitability in the memory semiconductor market after 2030 if there is an oversupply of DDR.

This could exacerbate China's attempts at technological self-reliance and the uncertainty in the global semiconductor market.

With the expected increase of up to 100,000 semiconductor-related personnel in Gwangju, there have been calls to re-establish housing policies. Accordingly, the city is considering constructing multi-core residential cities around the semiconductor national industrial complex.

Enormous funds are projected to be needed for the expansion of power infrastructure for data center construction and operation.

Over the next five years, more than 55 trillion won is expected to be spent on transmission and distribution construction alone, with a total investment of 61 trillion won estimated, even excluding power generation facilities.

Power transmission from the Gangwon Samcheok power plant has been delayed for nine years, indicating difficulties in expanding power infrastructure, and the burden of compensation and equipment costs for transmission and distribution is increasing.

As the need for compensation and employment policies in areas near power plants is emphasized with the expansion of AI data centers, this increase in power infrastructure investment costs could lead to higher electricity rates.

Amidst this trend, Chinese AI company 'Deepke' is preparing for an IPO on the Shanghai Stock Exchange's STAR Market to raise funds.

The U.S. bond market is facing its worst situation in 200 years, with recent declines in yields intensifying.

Bonds purchased during low-interest periods plummeted in value during the post-COVID-19 high-interest period, and now, with the recent strengthening of the Korean won offsetting existing exchange rate gains, Korean investors are suffering greater losses.

It is time for investors to carefully understand the trends in the bond market from a long-term perspective.

Currently, despite the composite index rising, the deepening polarization between individual stocks is leading to a contradictory situation where individual investors are turning away from the market. In such a situation, a cautious approach to the market and developing investment strategies from a long-term perspective are crucial.