KOSPI Defends 2,700 Amid Macro Headwinds

While semiconductor stocks showed strength, hitting 52-week highs, interest rate uncertainty due to the rise in the U.S. Producer Price Index (PPI) affected the market. Lee Hwa-jin, Deputy Head of Meritz Securities Gwanghwamun Premier Center, emphasized, "I have no doubt at all about the semiconductor cycle itself." He added, "Today's PPI results continue to highlight interest rates, so there could be a decline tomorrow. However, if we assume an interest rate freeze at next week's FOMC, then foreigners are not necessarily selling off due to a decline." He believes that if an interest rate freeze is expected at next week's FOMC, foreign selling pressure is likely to ease.

Kim Ji-hyeok, PB at Eugene Investment & Securities Seoul WM Center, said, "It seems that some parts and materials companies have recently risen sharply." He mentioned the increase in semiconductor demand due to AI technology development like GPT-5, explaining, "A narrative is forming where more semiconductors are inevitably needed." Therefore, he analyzes that there is no need to overinterpret foreign selling indicators.

Deputy Head Lee Hwa-jin explained, "SK Hynix's KRX portfolio weighting was 37%, and since the standard is 20%, this volume all came out at once during the concurrent bidding." He added, "Although there are various discussions about Samsung Electronics' and SK Hynix's third-quarter earnings, memory prices continue to rise steadily." The rise in memory prices acted as a support for the share prices of both companies.

Deputy Head Lee Hwa-jin stated, "From the third quarter, Vera Rubin began full-scale mass production in early August, and HBM is increasing, with legacy HBM prices like B200 rising by 30-40%." This is due to the ongoing shortage. Samsung Electronics and SK Hynix show differences in their proportion of general-purpose memory, and the shortage of AI accelerators such as Nvidia's H100/B200 also continues. Nvidia CEO Jensen Huang's declaration of the AGI (Artificial General Intelligence) era is expected to further accelerate memory demand.

The core competitiveness of the foundry market lies in securing yield for the 2-nanometer ultrafine process. TSMC holds a 72% market share, while Samsung Electronics remains at 5.9%. PB Kim Ji-hyeok said, "It is necessary to secure yield in 2-nanometer and continuously attract large customers." Although Chinese companies like SMIC are catching up, they mainly handle domestic Chinese volume, so Samsung Electronics will inevitably receive global big tech customer orders. PB Kim analyzed, "For now, there is no great need to worry about the gap with China."

Currently, the dominant view is that the technological gap with TSMC is more significant than competition with China.

Deputy Head Lee Hwa-jin mentioned, "The dividend announcement was already scheduled to be made after the third-quarter earnings release, so that will be at the end of October." He advised that a strategy of accumulating preferred shares from now on is effective to secure foreign holdings. He also noted the need to pay attention to discussions on revising the Act on the Structural Improvement of the Financial Industry related to Samsung Fire & Marine Insurance and Samsung Life Insurance equity issues.

The KOSDAQ market maintains a stronger market resilience compared to the KOSPI. PB Kim Ji-hyeok explained, "The fact that it is rising despite such high interest rates strongly suggests that it is being viewed in terms of overall AI infrastructure." He said, "The current market ultimately focuses on where money can be earned even with high interest rates, so companies related to AI are bound to rise." Funds are concentrated on AI infrastructure-related companies such as semiconductor parts and materials, secondary batteries, power-related firms, and robotics. However, there is also a possibility of a temporary pullback due to PPI and rising U.S. interest rates.

PB Kim Ji-hyeok expects that high interest rate levels will not continue indefinitely. He projected, "If interest rates were to decrease, and considering that the KOSDAQ's resilience is strong even at this level of interest rates, then if the macroeconomic environment were better, it's highly possible that an environment could be created for the KOSDAQ to sufficiently rise even to the 1,000 level." With anticipated changes in the U.S. administration's interest rate-related policies, a drop in interest rates is likely to further boost the KOSDAQ's current robust resilience, potentially leading to a rise to the 1,000 index level.

The continued high-interest rate environment is dampening investment sentiment in the pharmaceutical and bio sector. Even with large-scale technology transfer contracts, as in the case of Alteogen, stock prices face downward pressure. Deputy Head Lee Hwa-jin analyzed, "Within the pharmaceutical and bio sector, there could be differentiation between companies that generate profits and those that rely on technology transfers." Currently, market supply and demand are concentrated in sectors with immediate high growth potential, such as nuclear power, ESS, transformers, and robotics. Accordingly, differentiation is expected between 'profit-generating companies' and 'companies relying on technology transfers' depending on the reflection of their earnings.