September: 'Weak First Half, Strong Second Half' Market… Focus on Semiconductors, Infrastructure

The U.S. Federal Reserve (Fed) is solidifying a new monetary policy stance that prioritizes inflation control over employment indicators. This distinguishes itself from Chairman Powell's previous 'employment-first' approach and is interpreted as preparatory work that keeps the possibility of interest rate hikes open. Expert Kim Ki-eun analyzed that this stance from the Fed strongly conveys the message, 'I am going my own way. Interest rates will eventually be raised.'

There is a high possibility of a large-scale economic stimulus package being announced in late September, with infrastructure-related policies at its core. Emergency measures to improve the aging U.S. power grid, coupled with economic policies ahead of the Trump administration's midterm elections, could lead to lower long-term bond yields and massive infrastructure investment. Expert Kim Ki-eun predicts that these infrastructure policies will have a positive impact on the market.

A forecast suggests that the market will shift to an uptrend with strong momentum starting in late September. The semiconductor sector, in particular, has already undergone sufficient adjustment and is maintaining a robust trend, indicating a positive role. With infrastructure policies and consumer discretionary spending added, there is a high probability of the stock market rising, and this positive trend is expected to continue until before the midterm elections.

The current market shows a sluggish trend rather than a decline, leading to a significant loss of resolve among individual investors. Despite experiencing sufficient adjustment in July, they are in a psychologically challenging situation to endure. The expert emphasized that since foreigners are accumulating at low prices, individual investors must also persevere with patience. It was added that consistently responding to this dull sideways market without getting swept away is crucial.

An analysis suggests that the simultaneous expiration of futures and options will typically not entail significant volatility. Expert Lee Ji-hwan explained that the simultaneous expiration on March, June, September, and December does not cause major market changes due to its structural characteristics. However, he added that unpredictable volatility might appear before and after options expiration day due to the nature of short-term profit-seeking trading.

September is projected to be the most psychologically challenging month for stock investors. The market is expected to show a sluggish trend, potentially increasing investors' psychological fatigue. Expert Lee Ji-hwan pointed out that individual investors tend to focus on short-term trading and then sell off their holdings when a crucial upward period arrives. He analyzed that this typical pattern, where foreigners and institutions acquire individual investors' holdings, might repeat.

To navigate the September market, a strategy of maintaining semiconductor and power equipment sectors as leading stocks while focusing on consumer discretionary and infrastructure-related stocks was proposed. Semiconductors are analyzed to retain their leading position even after adjustments. Expert Lee Ji-hwan advised that to seize upward opportunities in the latter half of September, investors should incrementally target performance-based consumer discretionary goods like cosmetics, and focus on construction and nuclear power-related stocks that show movement from their bottom levels, as they are related to the U.S. infrastructure stimulus package.

For selecting stocks of interest, attention should be paid to construction stocks that simultaneously possess issues related to overseas business, capacity for large-scale project participation, and nuclear power relevance. If they also have data center construction capabilities, they could be even better investment targets. Expert Lee Ji-hwan added that infrastructure-related stocks that have seen sharp declines, such as U.S. Caterpillar, should be watched as momentum investment targets.

An analysis suggests that focusing on the resulting uptrend cycle rather than fearing interest rate hikes is more advantageous for returns. Expert Lee Ji-hwan emphasized the need to distinguish between the special circumstances of COVID-19 and a typical interest rate hike cycle, judging that the psychological adjustment before rate hikes already occurred in July. Considering that the average Nasdaq increase in the latter half of past rate hike periods was 45-60%, he advised that riding the uptrend cycle could bring better returns.

Expert Lee Ji-hwan stated that he maintains a strong stance on semiconductor stocks. However, he believes that interest rates ultimately determine the direction of investment and emphasized the need to be very cautious about interest rate volatility. He particularly warned about the variable of rising Treasury yields.

Some express concern about a scenario of policy failure similar to the Arthur Burns Fed chairman era in the 1970s, characterized by repeated interest rate hikes and cuts. At that time, interest rates rose from 3% to 12%, then fell to 4%, and rose again to 9%, showing unpredictable volatility. Expert Lee Ji-hwan mentioned the possibility of a policy clash between Besant and Kevin Noe, presenting a worst-case scenario that could occur if a rapid rate cut follows an increase. He warned that this could lead to an irreversible situation in the market.

An analysis suggests that with the prices of semiconductor stocks like Samsung Electronics and SK Hynix halved, their attractiveness for purchase has increased. Expert Lee Ji-hwan emphasized that their price-to-earnings ratio (PER) has fallen to 4-5 times, making them by no means expensive. From the perspective of a mid-to-long-term fund manager, the current timing is considered opportune for buying semiconductor stocks.

Experts view late September to early October, when shareholder value enhancement policies are confirmed, as the opportune time for a buying strategy. Expert Lee Ji-hwan projected that some buying should occur from late September, with the possibility of stock prices rising very sharply into October, November, and December. He plans to present further market analysis and strategies on his next scheduled appearance this Thursday.