KOSPI Pauses Amid Foreign Selling…

SK Hynix surpassed the KRW 180,000 mark, breaking through what was called the 'wall of tears'. While this is seen as a positive sign, it is again encountering resistance at the upper end of the 60-day moving average, limiting further upside. Unlike SK Hynix's ADR (American Depositary Receipt) setting a new high in the US market, its stock price in the domestic market shows relatively sluggish performance.

Foreign investors recorded a massive net selling of over KRW 4 trillion in KOSPI, including KRW 2.4 trillion in spot and KRW 2 trillion in futures. Including KOSDAQ, the total selling amounted to over KRW 5 trillion. In particular, due to SK Hynix's rebalancing, over KRW 1 trillion in selling volume was released, but buying pressure on semiconductor materials, parts, and equipment (Soo-Boo-Jang) stocks partially defended against the index's decline.

When the value of money rises, it is a common investment strategy to reduce the proportion of risky assets such as emerging market stocks. With oil prices also surpassing $100, inflationary pressure is increasing, and the combination of rising US interest rates and oil price instability is acting as a factor that encourages foreign selling.

As optimism for the Fed's rate hike freeze has faded, the market consensus is leaning towards a September rate hike. The market generally prefers a rate hike to resolve uncertainty. Even if the Consumer Price Index (CPI) comes out favorably, expectations for an immediate drop in interest rates are weak, and concerns about long-term rate increases due to fiscal uncertainty seem to outweigh inflationary pressure.

SK Hynix's recent surge exceeded the 30% limit for ETF inclusion, leading to rebalancing. As a result, funds withdrawn from SK Hynix and Samsung Electronics flowed into lower-tier Sooboojang stocks, causing some Sooboojang stocks to rise significantly. However, this is analyzed as a temporary phenomenon due to mechanical supply and demand inflow, and it is difficult to view it as a 'true rally'.

In a phase where interest rates rise beyond a critical point, the status of the semiconductor sector is strengthening, contrary to concerns about a slowdown in big tech investment. Semiconductors are perceived as companies that earn a lot of cash, have robust cash flow, and even have the ability to return value to shareholders. As a result, semiconductors are tending to be treated as essential assets, similar to commodities, rather than just technology stocks.

Meta introduced a new turning point in the AI market by unveiling 'Muse Spark,' a personal agent AI. This model is a model-based AI that individuals can utilize, with security and authorization issues being important considerations. The fact that Meta has launched a customizable AI based on its vast data utilization capabilities suggests the possibility of a new catalyst for advertising revenue.

Since July, KOSPI has consistently faced resistance at the 2,700-point upper bound, maintaining a range-bound trend. While the lower bound shows a gradual upward movement, strong upper resistance leads to a frustrating trend. The lack of leadership from leading stocks like Samsung Electronics and SK Hynix restricts the index's rise, and the current market remains in a non-trending period, relying on short-term rebounds of thematic stocks.

When the index reaches this level, it tends to shift to selling. It is analyzed that the 2,700-point level acts as the first resistance level for the index due to the weak buying sentiment of foreign investors, who are the main supply and demand players in the current market.

This suggests that investment funds are not staying in the stock market but are moving to other investment destinations such as real estate. Decreased liquidity can act as a factor that weakens the upward momentum of the stock market.

In years with US midterm elections, the stock market traditionally tends not to perform well. Additionally, September and October are periods when institutional investors rebalance their portfolios, so the market generally tends to slow down. The combination of these seasonal factors and midterm election risks is likely to increase stock market volatility.

In the US market, a seesaw game between the AI hardware and software sectors continues. In particular, a phenomenon of semiconductor long (buy) and software short (sell) pair trading is observed. For the Korean stock market to show a good trend, the hardware semiconductor sector must show strength in the US. Conversely, if the software and cybersecurity sectors show strength in the US, the domestic stock market may face downward pressure.

Given the current uncertainties, it is prudent to maintain a wait-and-see approach, confirming market data rather than hastily increasing positions. Unexpected rate hikes and hawkish remarks will exert significant downward pressure on the market.

In the current market situation, it is important to protect assets and observe rather than rashly investing. Waiting is also a strategy, and it is not too late to move when you are prepared to participate in a battle with a high probability of success. Statistically, a stock market rebound is expected after Halloween, and the fact that corporate earnings have not declined remains a hopeful factor.

This clarified that AI technology competition is a core issue for national security and the economy. She also pointed out that hyperscalers (large-scale cloud service providers) have been inadequate in communicating with the public about AI, raising the need to inform the public about the legitimacy and importance of AI investment, as public cooperation, such as AI data center permits, is essential.

The success of the US in the AI supremacy competition is expected to be a key variable in the future global market. There is even an extreme perception that if the US fails in AI investment, everyone could face mutual destruction. This is a massive trend that goes beyond mere investment returns. Investors must watch the situation with the resolve that, beyond simply observing whether the US can win AI hegemony and repay its debts, they could suffer together if it fails.