Is a Freeze More Dangerous? Interest Rate Hike Forecasts and the Stock Market

The prevailing view is that market interest rate increases have already been priced in. Accordingly, market attention is focused on the intensity of the Federal Reserve Chair's dovish or hawkish remarks following the Federal Open Market Committee (FOMC) meeting. In particular, if the dot plot is released and the Fed Chair's voting tendencies are confirmed, additional market reactions may occur.

The general sentiment is that recent macroeconomic events will conclude with the interest rate announcement. However, war and rising Treasury yields are external variables beyond market control, and these uncontrollable variables increase market uncertainty. In particular, whether Treasury yields stabilize at the 5% level will be a key indicator for determining the future direction of the stock market.

At the same time, reassuring remarks from Federal Reserve officials are also acting as a factor limiting the strength of the dollar.

Despite the KOSPI index recording a 1% increase, there were more declining stocks. This suggests a market movement centered on large-cap stocks, with small and medium-cap stocks relatively weak. The decrease in trading volume is also analyzed as reflecting a general wait-and-see attitude in the market. Currently, investments are concentrated on large-cap stocks like electronics and 'ix-se', with individual stocks losing momentum.

The KOSPI trading volume currently stands at 15.8 trillion won. With this level of trading volume, a rapid market increase like that seen until June is not expected. Currently, there is also a lack of indiscriminate follow-up buying from individual investors, and a moderate market increase should be accepted as a normal trend.

The market currently considers an interest rate hike a foregone conclusion with a 95% probability. Conversely, there is a possibility that if interest rates are frozen, it could cause a greater shock to the market and lead to a sharp rise in long-term Treasury yields. The best-case scenario is an interest rate hike accompanied by dovish comments in the future, with expectations for an end to the war and resolution of supply-side inflation.

However, the current situation involves complex inflation, posing a market burden similar to late 2021. Therefore, while an interest rate hike is not necessarily bad, interpreting it solely as a positive factor still carries risks. Potential burden factors, such as supply chain shocks, also remain.

It is crucial to understand the cyclical flow of semiconductor front-end and back-end processes. Trends of factory relocation and expansion in Vietnam are also confirmed, and increased demand for equipment due to Samsung Electronics' expanding HBM market share is expected. However, limited order announcements from companies make it difficult to ascertain individual stock performance, which is an obstacle to investment. Therefore, it is recommended to invest in a diversified manner through semiconductor SOBUJANG ETFs that include many equipment stocks, without distinguishing between front and back-end processes.

Micron, as well as Samsung Electronics and Hynix, are maintaining a policy of not disclosing their orders. As a result, performance confirmation is expected to be possible only by the end of the year or in the first quarter of next year.

The buying volume expanded to 1.1 trillion won at one point during the day and currently maintains a net buy of 670 billion won. This shift by foreigners to net buying is technically significant as it indicates that the selling pressure has ceased.

As the power consumption of Artificial Intelligence (AI) data centers rapidly increases, the demand for power efficiency technologies is growing. In particular, optical communication technology and liquid cooling systems, which can save power, are attracting attention. Currently, only memory is mainly discussed, but the power shortage issue is even more severe. The importance of these power efficiency technologies is also highlighted in the investment trends of major data center companies like TSMC.

The market reacted cynically to remarks by an executive from Nvidia claiming to surpass autonomous driving technology. Hyundai Motor's robot business also currently sees a decrease in valuation. While it has been confirmed that China's humanoid robot regulations are unrelated to Boston Dynamics, a generally skeptical market view dominates Hyundai Motor's autonomous driving and robot businesses.

One expert expressed a long-term intention to hold Hyundai Motor stock without selling a single share. They believe that the current Hyundai Motor stock price only reflects the automotive valuation, with the robot business segment being undervalued. It is also argued that proper timing of the listing is needed for Boston Dynamics' corporate value to be accurately recognized. This shows the perspective that the market's perception of Hyundai Motor's future growth drivers has not yet been fully reflected.

Foreign investors executed a KOSPI sell-off today and realized some profits in futures. Analyzing futures and options positions, the KOSPI index is projected to remain within a box range, with a lower bound of 950 and an upper bound of 1150 (approximately 7,200-7,300 when converted to the index). With the reduced influence of individual investors, the importance of foreign investors' positions in determining market direction is increasing again.

More than 80% of power bottlenecks are expected to occur due to data center expansion. While not yet apparent, the time has come when time-to-power is more critical than efficiency (LCOE). As power supply becomes urgent for data center construction, 'on-site' power supply methods like hydrogen fuel cells (SOFC, PAFC) have emerged as solutions. Related companies attracting attention include Vinatech, Doosan Fuel Cell, and Hansun Engineering.

The schedule for nuclear power plant investment in the U.S., originally set for the 17th and 18th, has been postponed to the 23rd. Furthermore, controversies surrounding the conditions and limitations on management participation related to the acquisition of Westinghouse shares have intensified market disappointment. Due to this uncertainty, investment sentiment for nuclear power-related stocks is shrinking, and interest is shifting to other energy solutions, such as 'on-site' power supply technology.