The U.S. Treasury's buyback policy and strengthened Korea-U.S. nuclear power cooperation are expected to positively impact the KOSDAQ and domestic small and mid-cap stock markets.
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The 20% leverage policy was effectively evaluated as 'a blunder.' Manager Kim Dong-ho analyzed that without this policy failure, the index's decline would have been much smaller. He further stated that moving forward, policy operations that do not harm the market are needed.
The decline in KOSDAQ and small-cap stocks was attributed to policy mistakes, and the index recovery speed is expected to be fast. Small-cap index target of 2,580 and KOSDAQ index target of 990 were presented.
In 2011, the Russell index rose 100% over five years. The Nasdaq index rose more than 200% from its low in 2011 until 2015. In contrast, KOSPI was confined to a sideways trend, rising only 30-40%.
Large-cap stocks with high foreign ownership, such as Samsung Electronics and Hynix, are expected to remain range-bound. KOSDAQ and small-cap stocks, which have expended relatively less energy, are projected to show strength, and there will be a structural change where share buybacks absorb foreign selling volume.
He emphasized that the core of the small and mid-cap market lies in megatrends and policy. He noted that now is the time to focus on nuclear power and shipbuilding, which are common policies in both Korea and the U.S. He presented 'construction' as a common keyword for nuclear power, shipbuilding, data centers, and semiconductors.
Equipment companies can manage with branch offices, but material companies require proximity to factories considering logistics costs and production efficiency. Therefore, the likelihood of material companies relocating to the Gwangju complex is high.
Construction stocks can be broadly categorized into four sectors: nuclear power plant construction (Hyundai Engineering & Construction, Daewoo Engineering & Construction), Gwangju region construction (Kumho E&C, Namhwa Construction), data center construction (GS E&C, Samsung C&T), and semiconductor construction (Samsung E&A).
Middle East stability and reconstruction demand are increasing, and there are government-led plans for new city construction and supply. Driven by these policy benefits and infrastructure expansion, the entire construction sector is highly likely to become a long-term market leader, and this trend is expected to continue for over a year.
He analyzed that the adjustment cycle for semiconductor materials, parts, and equipment stocks has ended, entering a turnaround phase, and there is a high probability of recovering previous highs. He advised checking for a breakout above the 60-day moving average as a purchase criterion.
U.S. Westinghouse proposed a joint stake acquisition to Korea. This could lead to the resolution of intellectual property disputes and opportunities to enter the U.S. nuclear power market. It is interpreted that the U.S. intends to utilize Korea's capital and construction capabilities.
The U.S. government has already secured the right to acquire a 20% stake in Westinghouse and has approached Korea for a joint investment of 1 billion dollars. It was revealed that KEPCO is being put forward as the acquiring entity, and the Korea-U.S. Strategic Investment Fund is being considered as a financial resource.
It was mentioned that the Korea-U.S. relationship is evolving from a technological alliance, including semiconductors, to a 'financial alliance' through joint acquisition of nuclear power stakes. This emphasizes Korea's role as a key partner within the U.S.-led supply chain.
Manager Kim Dong-ho analyzed that the policies of the Trump administration, which had been distrusted, will have the same effect as the FRB's 'Operation Twist' in the past. He emphasized that bond market stability is a prerequisite for the stock and real estate markets, and that the U.S. Treasury's long-term bond buyback program will play a crucial role in stabilizing the global bond market.
Manager Kim Dong-ho predicted that the KOSDAQ index will reach 1,200 points in the next year. He expects the market's focus to shift from large-cap to small and mid-cap stocks, and that a phase will come where large-cap stocks do not perform well, regardless of Nvidia's earnings announcement.
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