KOSDAQ Reaches 920 Points… Can It Lead to a 'Trend Rebound'?

The KOSPI fell 1.4% and the KOSDAQ fell 1.7%. Intraday lows continued to be renewed.

After several days of declines, reactions emerged such as, "I'm tired of this. It's not just the decline, but the feeling that it's been going on for days without any change."

Samsung Electronics fell 0.55%, and SK Hynix showed a 2% weakness. The KOSDAQ is showing signs of support at the 900-point level.

Lee Ji-hwan, CEO of Aurora Investment Advisory, analyzed, "Foreigners are continuously selling, and although individuals are buying, the supply and demand situation is not good because the main agents of supply and demand have changed."

With Soobujang and secondary batteries undergoing adjustments, the KOSDAQ has also fallen, and market movements are limited ahead of Samsung Electronics' provisional earnings announcement tomorrow.

SK Hynix's American Depositary Receipts (ADRs) plummeted 6%, which appears to be due to Micron's weak guidance, worsening the outlook for the memory semiconductor industry.

Micron's earnings provide a rough indication of the direction of the memory semiconductor industry. CEO Lee Ji-hwan said, "Looking at Micron Technology's earnings, there was actually nothing better than the earnings or guidance. Foreign supply and demand are returning, so it is necessary to maintain positions from a medium-to-long-term perspective."

Samsung Electronics' earnings are not expected to deviate significantly from market expectations, and structural improvements are underway, with long-term contracts accounting for over 35%.

The current buying by foreign investors in Samsung Electronics is interpreted as a move to view the short-term adjustment as a dip before the year-end market.

There is an extreme disparity in returns between the US and domestic markets, KOSPI and KOSDAQ, and large-cap stocks and Soobujang. CEO Lee Ji-hwan assessed, "Samsung Electronics and SK Hynix are not in a trend decline but an adjustment, meaning this gap has widened in a short period. Although we know it, it's a psychologically difficult market to accept."

While it appears to be moving within a box range on the index chart, the actual investment difficulty is very high, and frequent portfolio changes should be avoided.

The recent rise in the KOSDAQ is largely due to short covering, and sustained growth requires confirmation of additional supply and demand drivers.

The best signal is for the KOSDAQ to rise in tandem with the KOSPI; if only the KOSPI rises and the KOSDAQ falls, the KOSDAQ's upside will be limited. For Soobujang, the key to investment is whether the AI momentum-driven rotation continues.

As third-quarter earnings announcements begin in earnest from October, stock-specific differentiation based on raw material prices and exchange rates is expected to intensify. CEO Lee Ji-hwan pointed out, "The problem is that small and medium-sized enterprises on the KOSDAQ are quite vulnerable to the effects of interest rates and exchange rates. So, in October, as the earnings season officially begins, there might be some debate among stocks about whether their Q3 earnings will meet expectations."

In particular, stocks with high raw material sensitivity, such as materials within the parts, materials, and equipment sector (Soo-Bu-Jang), are likely to have lower-than-expected earnings.

Short-term investors should consider reducing their positions, while long-term investors should wait to confirm Samsung Electronics' provisional earnings announcement before deciding on their positions.

Focusing on stocks that are breaking through resistance levels is more advantageous at this point.

The secondary battery sector has enough room for an upturn if it simply confirms a floor without further earnings decline. CEO Lee Ji-hwan assessed, "I believe that if the secondary battery sector at least confirms a floor, without additional earnings decline, it has some room for an upturn. When Soo-Bu-Jang stocks are leading the market to some extent on KOSDAQ, if secondary batteries perform at least above average, KOSDAQ could actually recover to 1,000."

Expectations include the expansion of the ESS (Energy Storage System) market compared to the electric vehicle market, and indirect benefits from efforts to curb Chinese companies. Tesla's earnings announcement is expected to play a crucial role in confirming the floor for secondary batteries.

If secondary batteries find their floor, a recovery of the KOSDAQ index to 1,000 could become a reality.

Although the trend was positive along with the U.S. cyclical consumer market, concerns about reduced consumption arose due to geopolitical risks and soaring oil prices, leading to increased stock-specific differentiation.

In the U.S., cosmetics and automobiles both saw an upward reversal, but in Korea, cyclical consumer goods other than cosmetics are not performing well. Hyundai Motor is in a complex situation due to its robotics business, while Kia is performing better.

As cosmetics experienced a sharp decline for two consecutive years after its Q3 earnings announcement this year, CEO Lee Ji-hwan recommended, "Although cosmetics was once targeted and is now in a resting phase, I hope you continue to pay attention to cosmetics as the cyclical consumer good to watch until the end of the year," suggesting a short-term swing approach until year-end.

After finding its bottom on July 29, the market has been moving within a box range and is currently at the very end of that range. CEO Lee Ji-hwan assessed, "The market, in a way, found its bottom on July 29 and rebounded, then moved within a box range, and is now almost at the very end of this box range."

At the bottom of the box range, theme stocks show extremely short lifespans, ending on the same day or lasting only a day or two. Only investors with a technical approach can respond, making it difficult for general short-term traders.

Preparation for a trend reversal in leading stocks like semiconductors and secondary batteries is necessary at this point.

With KOSPI's recent poor performance and the concentration of these major events, high volatility is expected. Even if there's a further decline, a short-term bottom could form, and individual investors are likely to liquidate positions to avoid holiday uncertainties.

If volatility continues until next week's U.S. option expiration, a rally might be possible thereafter. Foreign investors showing buying volume before Samsung Electronics' provisional earnings announcement is interpreted as a positive sign.

September was an extremely risky month, with 10-year Treasury yields surpassing 5.0%, oil prices breaking $100, the FOMC, ECB, and Korea all raising interest rates, and even a slowdown in AI development. CEO Lee Ji-hwan recalled, "September was truly a risky month. The 10-year Treasury yield actually surpassed 5.0, oil prices broke $100, the FOMC raised interest rates, the ECB raised interest rates, we also raised interest rates, and the most important momentum here was even a slowdown in AI development. So, if there had been a sharp decline, September's sharp decline would have been truly frightening."

Nevertheless, the market did not fall, and the Nasdaq renewed its all-time high, which indicates an underlying sentiment for growth. Currently, there is no decline, but a clear trigger to induce an upturn is lacking.

Samsung Electronics' provisional earnings announcement is the first candidate for a trigger, and the market's reaction next week will determine whether it rises. From October, it is necessary to approach the market from a positive perspective.