KOSPI Tests the 120-Day Line; Nvidia Earnings and Shareholder Returns Are the Variables

Caution remains over external variables such as Nvidia's earnings release and key PC indicators.

The market is currently in a downtrend, continuously falling along the 40-day moving average. Experts expect a higher likelihood of a clear directional move, either up or down, rather than sideways trading. Whether geopolitical noise, such as ceasefire agreements and the Strait of Hormuz, is resolved could be a variable.

There were no concrete mentions of robotics, including the listing of Boston Dynamics, and with earnings below expectations and previously known content repeated, disappointment selling emerged. Expert Lee Kwon-hee remarked, "Hyundai Motor is canceling shares worth less than 1%... they must have been disappointed," conveying the market's reaction.

As a result, the potential for share price gains after the earnings release may be limited. Concerns about slowing growth and comments from CEO Jensen Huang are expected to be the main factors determining the stock's direction. Expert Jang Woo-jin expressed concern over the high expectations, saying, "People are already expecting a surprise... it needs to go beyond that."

In particular, trading volume in related stocks such as Doosan Enerbility has surged, drawing market attention. The large nuclear project itself matters more than the Westinghouse stake investment issue, and this is expected to present a major opportunity for domestic nuclear-related companies. Expert Lee Kwon-hee stressed the significance of the announcement, saying, "The U.S. government has finally drawn its sword and said it will build ten."

However, it is uncertain whether the drop in department store spending will directly lead to lower overseas travel demand. Expert Jang Woo-jin suggested a cautious approach to changes in consumption patterns, saying, "If there were such an effect, could people visit department stores less but travel abroad more? Probably not."

Discussion on nuclear power is expected to continue, and related news is likely to keep coming. Expert Lee Kwon-hee forecast, "I think it will go on. Now the discussion is happening. It will be noisy. Yes, news will keep coming out." Whether the rebound in nuclear theme stocks will be short-lived or sustained is uncertain, but the view is that continued attention is needed.

The KOSPI's short-term targets were presented as 7,100 to 7,500. Expert Park Byung-chang stated, "The target I see this time is 7,100 to 7,500, and I think it's heading toward 7,500. Since it held 6,500, that's the first button fastened for it to reach 7,500." The analysis is that holding the 6,500 level will be the first step toward 7,500.

Expert Park Byung-chang explained, "Even when Samsung and Hynix don't fall and gradually rise, other stocks don't fall with them. Rotation is happening, but buying demand on the opposite side of Samsung and Hynix has become much stronger." The analysis is that the market's strength has improved as sector weights outside semiconductors have expanded.

Chasing stocks that are surging on their first day can be difficult for individual investors. Expert Park Byung-chang said, "Yesterday, nuclear stocks started soaring first thing in the morning, and it's not easy for individual investors to simply buy along at that point. So what should we do? As I said, several sectors have been rotating. Among those sectors, weren't there the strongest stocks? The best are stocks during that pause that have no trading volume and that the original buying players haven't sold." He advised that a strategy of targeting stocks that have already moved strongly on pullbacks is effective for individual investors.

Ahead of the U.S. presidential election, money is not flowing out of the market. Expert Park Byung-chang likened the situation, saying, "Isn't it said that the election will put more money in? When money flows into the market, the market rises. But money isn't being added or withdrawn. If you press one side of a balloon, the other side bulges out. That's exactly what market rotation is right now." The analysis is that a rotation structure, in which other sectors fall when specific sectors rise within limited funds, is dominating the market.

Expert Park Byung-chang pointed out, "It's undervalued relative to earnings, so why not talk about how far it can rise, and why only talk about shareholder returns? The market has formed the view that since the share price can't move on that logic, it needs to be driven by shareholder return policies. The time has come to focus again on earnings, fundamentals, and rising DRAM prices." He stressed that the time has come to focus on earnings and fundamentals themselves.

Expert Lee Kwon-hee said, "I don't think it's right to shun Samsung and Hynix." His view is that attention should be paid to shareholder return policies and the increase in free cash flow.

The KOSPI's 12-month ROE is 25.4%, among the highest in the world. However, the current PBR is 1.4 times, which is analyzed as undervalued compared with the appropriate level of 2.4 times. Expert Lee Kwon-hee suggested the possibility that the KOSPI is undervalued, saying, "If ROE is 25.4%, what is the appropriate valuation? It's said to be between 9,000 and 10,000."

Expert Lee Kwon-hee noted, "What guideline did SK Hynix just present? It's more than 50% of free cash flow, right?" Shareholder return trends are expected to spread mainly across manufacturing companies by year-end.

Expert Yoo Young-ah says the essential difference in stock-picking skill is not large. "In this market, I couldn't sell Sky Nic or Samsung Electronics at the peak, and that seems very painful. But I think stock skill is basically all the same. If you look at it, it's not wrong. The difference between stock beginners and experts is just study, and they seem similar." She stressed that even experts cannot avoid losses in a downturn. Ultimately, she said, the attitude toward facing declines and how to respond is what matters.

Expert Yoo Young-ah noted, "The theme of this Jackson Hole meeting itself is related to payment settlement. So if they make favorable remarks about stablecoins there, short-term yields might come down a bit." Efforts to lower bond yields through coordination between the U.S. Treasury and the Fed are expected, and stablecoins are also seen as a possible buyer of short-term government bonds.

The core of the construction industry is shifting from traditional apartment construction to nuclear power and AI data center construction. This means the nature of the construction business is transforming into infrastructure projects that are not tied to the economic cycle. Expert Yoo Young-ah explained, "It's an industry that isn't affected by the economic cycle. Nuclear power is accelerating because data centers lack power, and for nuclear and AI data centers, there's a need to win orders quickly and push projects forward regardless of available funds. With AI data centers there's also Sovereign AI, so these could become momentum for construction stocks. I think it would be interesting for you to study them." Benefits from U.S. energy infrastructure partnerships are also expected.

The analysis is that the scale of Hyundai Motor's share cancellation triggered market disappointment. Analysts point out a lack of concrete responses to the EV chasm (a temporary stall in demand before mass adoption) and of specifics on the robotics business vision. Expert Lee Kwon-hee said, "People who buy Hyundai Motor and Hyundai Mobis probably didn't buy them as auto parts companies. If Hyundai is to become a humanoid robot maker, data collection is key in my view," advising investors to maintain a long-term holding perspective rather than short-term trading.

A bond-mixed ETF was presented as a strategy that can be included within the 30% safe-asset allocation of an IRP account and can reduce volatility through mechanical rebalancing.

During a share buyback period, there are limits on the number of shares that can be acquired per day and on bid prices. Expert Choi Chang-gyu explained, "There are rules during a buyback period. There's a cap on how many shares can be bought in a day, and from foreign investors' perspective, they know how much SK Hynix's buyback will come in." Because foreign investors can predict the scale of buybacks, some are said to deploy selling strategies that take advantage of the characteristics of this period.

In the past three months, 46 new ETFs have been listed, including more than 11 bond-mixed ETFs. Expert Choi Chang-gyu explained, "Since June, 46 new ETFs have been listed in just three months. There are as many as 11 bond-mixed products, using a defensive mixed strategy that holds about 50% in equities and the rest in bonds. Since June, asset managers have judged that finding alpha is effective, and they are preparing for a market where winners and losers are separated." This is seen as reflecting a defensive investment mindset that keeps the equity allocation at around 50% with the remainder in bonds. The analysis is that the market is shifting from beta-driven moves to a market that seeks alpha and separates winners from losers.

It takes three to six months for an ETF to go from listing application to approval, so it is difficult for ETFs to lead the market. Expert Choi Chang-gyu advised, "For an ETF to lead the market means it cannot get ahead of it. From listing application to approval takes three to six months, so it is inevitably lagging. I'd suggest using ETFs to read between the lines of what asset managers are signaling and what investment implications they are hinting at." He added that ETFs that fail to win investor choice will naturally be weeded out, and that using ETFs as a reference for reading asset managers' market outlooks and investment ideas is the preferable approach.