KOSPI Testing 120-Day Moving Average Breakout… Nvidia Earnings and Shareholder Return Policy Are Variables

The KOSPI is currently fluctuating around the 120-day moving average. Market experts analyze that whether it settles above the 120-day moving average this week will be key to future technical trends. There is also lingering caution about external variables such as Nvidia's earnings announcement and major PC indicators.

The current market shows a continuous downward trend along the 40-day moving average. Experts predict that directional movement, either up or down, is more likely than a sideways market. Variables could include the resolution of geopolitical noise, such as previous agreements and the Strait of Hormuz.

Hyundai Motor announced an 800 billion won share buyback and cancellation at its Investor Day, but it was evaluated as not meeting market expectations due to its low proportion compared to market capitalization. There was a lack of specific mention of robot-related plans, such as the listing of Boston Dynamics, and the repetition of previously known information, along with lower-than-expected earnings, led to selling. Lee Kwon-hee, expert, commented, "Hyundai Motor is canceling less than 1% of its shares... they must have been disappointed," conveying the market's reaction.

Market expectations are already very high, with the probability of Nvidia's revenue and EPS surprising analysts exceeding 96%. Due to this, there is a possibility that the stock price increase after the earnings release may be limited. Concerns about slowing growth and comments from CEO Jensen Huang are expected to be key factors in determining the stock price direction. Jang Woo-jin, expert, expressed concern about the high expectations, saying, "They already expect a surprise... it needs to be even better than that."

The U.S. government's announcement of plans to build 10 large nuclear power plants has brought significant attention to related industries. In particular, trading volumes of related stocks, such as Doosan Enerbility, have surged, attracting market focus. The large nuclear power plant project itself is more important than issues regarding Westinghouse equity investment, and this is expected to be a major opportunity for domestic nuclear power-related companies. Lee Kwon-hee, expert, emphasized the importance of this announcement, stating, "The U.S. government has finally drawn the sword and said they will build ten."

Due to concerns about interest rate hikes, department store consumption decreased in the third quarter. However, it is uncertain whether a contraction in department store consumption will immediately lead to a decrease in overseas travel demand. Jang Woo-jin, expert, cautiously approached changes in consumption patterns, saying, "If that impact exists, people can't go to department stores, so if you ask if they can travel overseas a lot, that wouldn't be the case either."

Discussions on nuclear power are expected to continue, with related news likely to keep emerging. Lee Kwon-hee, expert, predicted, "It seems it will continue. Now the discussion is happening. It will be noisy. Yes, then news will keep coming out." While it's uncertain if the rebound in nuclear power theme stocks will be short-lived or sustained, continuous attention is deemed necessary.

The short-term target for the KOSPI has been presented as 7,100 to 7,500. Park Byung-chang, expert, stated, "My target for this time is between 7,100 and 7,500, and I think it's heading towards 7,500. Since 6,500 was maintained, the first button has been fastened to go to 7,500." He analyzed that maintaining the 6,500 level would be the first step towards reaching 7,500.

The concentration on Samsung Electronics and Hynix has eased, leading to a spreading rotation in the market. Park Byung-chang, expert, explained, "Even if Samsung and Hynix don't fall and rise slightly, other sectors don't fall together. A rotation is happening, but buying in sectors opposite to Samsung and Hynix has become much stronger." He analyzed that the market's strength has improved with an increased proportion of sectors other than semiconductors.

Chasing rapidly rising stocks on the first day can be difficult for individual investors. Park Byung-chang, expert, advised, "For example, with nuclear power yesterday, when it started to appear in the morning, just buying it right away in the morning is not easy for individual investors. So, how do I think we should act? As we discussed, various sectors moved in rotation. There were the strongest stocks in those sectors, weren't there? In the pauses, as we've always studied, it's best if there's no trading volume and the original buyers haven't sold." He explained that a strategy of targeting stocks that have already moved strongly at their pullback points is effective for individual investors.

Funds are not leaving the market ahead of the U.S. presidential election. Park Byung-chang, expert, used an analogy: "Isn't the presidential administration saying they will inject more money? If money flows into the market, the market goes up. But they are neither injecting nor withdrawing money. In this state, if you press one side of a balloon, the other side bulges out. That's what the current market's rotation is." He analyzed that a rotational structure, where one sector rises while others fall within limited funds, dominates the market.

An analysis suggests that Samsung Electronics brought up shareholder returns as an issue when the logic of stock price increase based on semiconductor performance failed to work. Park Byung-chang, expert, pointed out, "Why aren't they talking about how much higher the stock can go when it's undervalued compared to performance, and only talking about shareholder returns? A market has formed where, because the stock price can't move with that logic, they have to push it with a shareholder return policy. It's time to refocus on performance, fundamentals, and rising DRAM prices." He emphasized that it's time to concentrate on performance and fundamentals themselves.

Foreign selling of Samsung Electronics and SK Hynix is assessed as a temporary supply and demand issue. Lee Kwon-hee, expert, said, "Ignoring Samsung and Hynix is not the right approach." He suggested focusing on shareholder return policies and increased free cash flow.

The KOSPI's 12-month ROE is 25.4%, which is among the highest in the world. However, its current PBR is 1.4x, analyzed to be undervalued compared to the appropriate level of 2.4x. Lee Kwon-hee, expert, suggested the possibility of the KOSPI being undervalued, stating, "If the ROE is 25.4%, what's the appropriate valuation? It's 9,000 to 10,000."

SK Hynix has presented a guideline to return 50% or more of its free cash flow to shareholders. Lee Kwon-hee, expert, mentioned, "SK Hynix has now presented a certain standard guideline, right? Over 50% of free cash flow." The trend of shareholder returns is expected to spread, mainly among manufacturing companies, by year-end.

Yoo Young-ah, expert, states that there isn't a significant fundamental difference in stock skills. "In this market, I couldn't sell SK Hynix or Samsung Electronics at their peak. It seems people are suffering a lot. But I think, in a way, everyone's stock skills are the same. When you look at it, it's not wrong. Beginner investors and experts are similar; it's just a difference in study." She emphasized that even experts cannot avoid losses in a downturn. Ultimately, the attitude towards facing and responding to a downturn is crucial, she stated.

With the theme of this year's Jackson Hole meeting known to be related to 'payments', expectations for bond yield stabilization are growing. Yoo Young-ah, expert, commented, "The theme of this Jackson Hole meeting itself is related to payments. So, if they make favorable remarks about stablecoins there, short-term yields might also come down a bit." Efforts by the U.S. Treasury and the Federal Reserve to coordinate to lower bond yields are expected, and the possibility of stablecoins acting as a demand source for short-term Treasury purchases is also raised.

The focus of the construction industry is shifting from traditional apartment construction to nuclear power plants and AI data centers. This means that the nature of the construction industry is transforming into infrastructure projects that are not affected by economic cycles. Yoo Young-ah, expert, explained, "It's an industry not affected by the economy. Nuclear power, for example, is also accelerating due to power shortages in data centers, so regardless of money, we need to quickly secure orders and proceed with projects like nuclear power and, as I mentioned, AI data centers, with sovereign AI. So, these aspects could be a momentum for construction stocks, and I think it would be interesting to study them." Benefits from partnerships for U.S. energy infrastructure construction are also anticipated.

An analysis suggests that the scale of Hyundai Motor's share buyback and cancellation caused market disappointment. There was a lack of specific mention of responses to the EV chasm (temporary slowdown in demand before widespread adoption) and the vision for the robot business. Lee Kwon-hee, expert, stated, "I don't think people buying Hyundai Motor and Hyundai Mobis bought them as automotive parts companies. I think data collection is key for humanoid robots." He advised maintaining a long-term holding perspective rather than short-term trading.

Samsung Electronics and SK Hynix are analyzed to be transforming from cyclical industries into companies that prioritize shareholder returns. Choi Chang-gyu, expert, commented, "In the case of Samsung Electronics and SK Hynix, they seem to have not only momentum as growth stocks, but also value as value stocks." He explained that these companies exhibit characteristics of both growth and value stocks. A bond-equity mixed ETF was proposed as a strategy that can be included within the 30% safe asset allocation of an IRP account and can mitigate volatility through mechanical rebalancing.

During a share buyback period, there are limitations on the number of shares that can be acquired on a given day and on bid prices. Choi Chang-gyu, expert, explained, "There are rules during the share buyback period. There's a limit to the number of shares that can be acquired that day, and foreign investors know how much SK Hynix's share buyback will be." He analyzed that foreign investors can predict the size of the share buyback, so they sometimes employ selling strategies that utilize the characteristics of this period.

Over the past three months, 46 new ETFs have been listed, including more than 11 bond-equity mixed ETFs. Choi Chang-gyu, expert, explained, "In just three months since June, 46 new ETFs have been listed. A staggering 11 types are bond-equity mixed, employing a defensive '짬뽕' (mixed) strategy, holding about 50% in stocks and the rest in bonds. Since June, asset management companies have deemed it effective to seek alpha, preparing for a period of stock picking." This reflects a defensive investment sentiment, maintaining about 50% in stocks and the rest in bonds. He analyzed that the market is shifting from beta-driven to an alpha-seeking, stock-picking environment.

ETFs cannot lead the market because it takes 3-6 months from listing application to approval, making them inherently lagging. Choi Chang-gyu, expert, advised, "ETFs leading the market means they cannot precede it. It takes 3-6 months from listing application to approval, so they are bound to be lagging. Please use ETFs as a way to read between the lines of asset management companies, to see what investment implications they are suggesting." He added that products that do not receive investor selection will naturally be phased out.