Sector Rotation Intensifies After Nvidia's Earnings Announcement, Where Is the Market Headed?

Several terms are used to describe stock market movements. 'Flat' refers to when the index moves within a range of 0.2% to 0.3%, indicating a market that is trading sideways without significant fluctuations. A rise between 0.5% and 1% is classified as 'up,' and a rise between 1% and 2% is categorized as 'significant gains,' expressing a strong upward movement in the market.

Nvidia rose 4.3% in after-hours trading after announcing better-than-expected earnings. This strength positively impacted the entire semiconductor industry, with Micron Technology and SanDisk rising 3.8%, and SK Hynix ADR (American Depositary Receipts) increasing 4.6%.

Individual stocks with low market capitalizations, typically between 100 billion and 200 billion won, show very high volatility due to news, posing significant investment risks. Especially in broadcasts targeting a large audience, recommending such stocks can heavily influence investors and requires caution. Therefore, the principle is to explain based on sectors to understand overall market trends and manage risk, rather than focusing on individual stocks.

Even if a company's intrinsic value remains unchanged, the reaction to specific news and sectors varies depending on the overall market sentiment and environmental changes. Recently, the sector rotation in the market has become much stronger than in the first half of the year, and the intensity of the rise has also been more prominent. This phenomenon is analyzed as capital and investor interest rapidly shifting to specific sectors.

The market has recently been forming a short-term trend where lows are gradually rising, and highs are also moving upward. Yesterday's market rebound can be seen as the starting point of this uptrend, and if an additional rise of over 2% occurs today, the positive market trend is likely to continue. In a long-term perspective, the target for the KOSPI index is set at 7,500 points.

In the domestic semiconductor market, SK Hynix is showing relatively stronger upward momentum than Samsung Electronics. This suggests that the current semiconductor market trend is favorable to SK Hynix. Furthermore, about 6 out of the top 10 market capitalization stocks in the KOSDAQ market are semiconductor-related, confirming that the KOSDAQ index's upward trend is being led by semiconductor equipment stocks.

Nvidia recorded a gross profit margin of 75% in the second quarter but lowered its next guidance to 74%. The primary reason for this expected decline was identified as rising memory prices. As memory prices increase, Nvidia's cost burden is expected to rise, affecting its gross profit margin.

Nvidia's revenue is expected to reach approximately $680 billion next year, marking over 50% growth year-on-year. This explosive growth is anticipated not only from robust growth in the data center segment but also from projected revenue expansion through a new field called 'Sovereign AI.' Sovereign AI refers to the AI infrastructure development initiatives undertaken by national governments to protect their data sovereignty, and Nvidia is expected to secure additional growth drivers in this sector.

Foreign investors are consistently maintaining long positions in the futures market even while selling domestic spot stocks. This phenomenon is analyzed as likely hedge trading in preparation for market volatility, rather than simple program trading or arbitrage. This could suggest that foreign investors are preparing for future market uncertainties while also anticipating positive changes in the stock market at certain points.

SK On gained significant popularity when it listed with an IPO price of 105,000 won, and its stock price once surged to 250,000 won. However, the stock price recently dropped to the 10,000 won range, and the merger price with SK Innovation has been set at approximately 14,700 won. This significantly lower merger price compared to the IPO price, following the spin-off and re-merger process, has drawn strong criticism from minority shareholders. Investors are raising concerns that the strategic decisions of the management and owner have harmed shareholder value, and the controversy continues.

Currently, the KOSPI market is trapped in a box range, showing no clear direction according to technical analysis. The daily chart shows the index trading sideways, searching for direction, while the weekly chart indicates the index hitting upper resistance. Conversely, the monthly chart shows solid support being maintained at the bottom. In this situation, it is necessary to respond cautiously by observing the market's up and down movements rather than aggressive investing.

According to Micron, while AI computing performance is rapidly advancing, memory technology development is not keeping pace. This leads to a deepening bottleneck as AI system performance expansion faces memory capacity and supply constraints. In particular, the expansion of High Bandwidth Memory (HBM3) production increases silicon wafer consumption by three times compared to existing DDR5, exacerbating the DDR5 supply shortage. This phenomenon is expected to sustain the 'shortage' (supply deficit) situation in the AI memory market.

Despite continuous positive news related to Posco Holdings, including the expansion of its lithium business, the stock price has shown little movement. This is attributed to the stock being tied up in an investor supply zone that formed at an already high level. Even with positive news, profit-taking and stop-loss selling from investors who bought at previous highs are acting as factors limiting the stock's upward movement.

The Chinese government announced a policy to cease tax incentives for battery manufacturers and impose additional consumption taxes. While these tax increases might seem unfavorable to battery companies, some analyses suggest they could actually have a positive impact on leading companies like CATL, the industry leader. This is because when taxes increase, companies usually pass the burden on to consumers through price increases, and companies with strong market dominance have greater pricing power to easily reflect such cost increases in consumer prices.

Governance reform in the Korean stock market is emphasized as a crucial factor that can bring a positive 'trickle-down effect' to small and medium-sized enterprises (SMEs), beyond merely improving the governance structure of large corporations. If governance reform is successfully implemented, market transparency and efficiency will increase across the board, which is expected to significantly change the atmosphere of the domestic stock market. Therefore, rather than being swayed by short-term individual news, it is necessary to grasp the broader market trends and respond by focusing on structural changes such as governance reform.

Unlike the first half of the year, the market recently shows a stronger rotation pattern, with various sectors such as semiconductors, shipbuilding equipment, and AI moving independently according to their respective issues. This indicates that market changes are not confined to specific sectors but are occurring broadly. Therefore, investors need to accurately grasp the overall sector rotation trends of the market, rather than fragmented issues of individual stocks, and flexibly adapt to these changes.