Which stocks will lead the market in the first half of next year?

Executive Director Park Se-ik diagnosed that a significant rise in the Korean stock market from 2,500 to 9,000 would be impossible without fundamental changes in its fundamentals. Korea has now secured an economic status on par with global top-tier countries like Germany, Japan, and the UK.

Among countries with a population of over 50 million, Korea's economic status is unique. Coupled with the momentum for restoring minority shareholder value through commercial law reform, expectations for further value-up in the stock market are growing.

As a manufacturing powerhouse, Korea plays a key allied role with the U.S. in major industries such as shipbuilding, batteries, semiconductors, and defense, serving as a crucial pillar of the global supply chain. It also possesses export competitiveness in various items, including toilets.

Additionally, with the surge in cultural content exports, led by entertainment, Korea has firmly established itself as a cultural powerhouse. This strengthening of industrial and cultural competitiveness acts as a significant factor driving the value-up of the Korean stock market.

It is observed that the stock price is unlikely to fall below the 2,000-3,000 level.

Executive Director Park Se-ik emphasizes that such 'buy-and-sell' opportunities typically occur in the third quarter before the U.S. midterm elections. Investors are advised to utilize this period to strengthen their portfolios.

HBM is structured such that its specifications are determined at the development stage, customized for AI servers.

Executive Director Park Se-ik emphasizes that HBM is not a general-purpose product but a customized one developed to maximize the performance of specific AI servers. He analyzes that with GPUs facing limitations in further improvement, HBM becomes central to enhancing AI performance.

Despite expectations of an ultra-supercycle due to the data center boom in 2018, SK Hynix's operating profit plummeted from 20 trillion won to 2 trillion won.

Due to such past experiences, investors lack confidence in the sustainability of profits in the memory semiconductor industry. With the market splitting into high-margin, long-term contracted HBM and volatile general-purpose semiconductors, investor sentiment is becoming more complex.

HBM is traded on an annual contract basis, making it difficult to immediately reflect market price changes. Therefore, projections that HBM prices will rise by 50% or 100% next year largely represent a catch-up to DRAM prices that could not be reflected quarterly.

Executive Director Park Se-ik noted that HBM could face price reduction pressure if general-purpose DRAM prices decline. In other words, HBM prices are likely to react to general-purpose DRAM prices with a time lag, requiring continuous monitoring.

This potential correlation could be a critical variable in assessing the stability of the HBM market, suggesting that despite high-margin fixed contracts, it cannot entirely escape the overall memory market situation.

The economy remains robust, and consequently, the unemployment rate forecast has been lowered to 4.1%.

This situation suggests that despite high interest rates, the overall vitality of the economy is maintained. This could have complex implications for predicting the direction of monetary policy.

The downward revision of the unemployment rate forecast from 4.3% to 4.1% confirms the robustness of the labor market. However, this strong employment paradoxically increases the likelihood of further tightening in a situation where inflation is above target.

Behind the hinted possibility of an interest rate hike at the next FOMC meeting lies these robust employment figures. Economic agents are closely watching these conflicting signals to gauge the market's direction.

As the Middle East crisis continues, anxiety over oil prices intensifies. In particular, with Houthi rebels controlling the Red Sea region and Saudi Arabia's inadequate response, there is no sign of oil price stabilization.

This oil price instability acts as an inflationary pressure, dampening investor sentiment. Market volatility is expected to continue as long as geopolitical risks are not resolved.

Despite the neutral rate being an essential academic concept in monetary policy decisions, the Fed is criticized for ignoring it and avoiding communication. If the policy rate is higher than the neutral rate, it contracts the economy; if lower, the economy improves but could stimulate inflation.

However, the Fed dismisses it as an academic concept and refuses to communicate with the market. This creates a disconnect between the clear guidance the market desires and the Fed's stance, increasing investor confusion.

Predictability in monetary policy is crucial to avoid being 'the fool in the shower,' as Professor Milton Friedman once mentioned. In the past, the Fed provided clear guidance, allowing the market to respond.

However, since Chair Jerome Powell, the Fed has shifted to a data-lagging response rather than proactive communication. This leads to unpredictable policy operation, undermining market confidence and amplifying uncertainty.

This change in the Fed's communication style makes it difficult for investors to gauge policy direction, contributing to increased market volatility.

In October 2018, when interest rates surpassed 3%, Jerome Powell was asked about the position of the neutral rate. The market significantly plummeted the moment Powell answered, "It's a long way off."

This is an instance where the Fed's ambiguous stance on the neutral rate caused great uncertainty in the market and damaged sentiment. The current situation also warns of a potential contraction in investor sentiment amidst similar neutral rate debates.

Analyzing the dot plot reveals an optimistic outlook that the upper bound of interest rates will not exceed 4.5%. This suggests the possibility of interest rate cuts in the long term.

Executive Director Park Se-ik anticipates interest rates to fall as we head into 2027 and 2028, expecting strong employment and the defensiveness of the semiconductor sector to positively influence the market.