Foreign Selling Amid Interest Rate Concerns, What Are the Conditions for a Rebound?

Analysis suggests that much of the market's negative news has already been reflected in the decline from last Friday to Monday. While it's necessary to monitor foreign and institutional supply-demand flows, further downside is expected to be limited. Attempts at a technical rebound may be observed, centering on large-cap stocks like Samsung Electronics and SK Hynix.

If interest rate concerns ease, there is a high possibility that expectations for these stocks will build. Currently, a technical rebound is being observed in a state of supply-demand vacuum.

The market is exhibiting a strong wait-and-see attitude ahead of important economic events this week, including the FOMC and BOJ. Rather than aggressively engaging in bargain hunting at this juncture, a conservative approach is recommended, seeking entry strategies after the related uncertainties have been resolved.

Cybersecurity-related stocks tend to move inversely to the overall market. When the market declines, cybersecurity stocks rise, and when the market rebounds, these stocks tend to fall. This dynamic suggests that funds from leading stocks (like SandsLab) may be dispersed when the market undergoes a correction.

Just a few months ago, there were widespread concerns that the advancement of AI technology would lead to a crisis for software companies and job losses. However, with the recent surge in AI-related stocks, the dominant market narrative has completely reversed. AI is now positively perceived as a new growth engine for the software industry.

As competition among AI companies intensifies, the release cycle for new AI models is shrinking to 1-2 weeks. This leads to difficulties in recouping profits despite continuous large-scale investments. Therefore, the argument for controlling AI speed is analyzed as an intention to increase corporate value, solidify the position of frontier companies, and block the entry of latecomers.

According to the report, Chinese companies illegally bypassed Anthropic's Claude to gather information and train data. This is interpreted as a strategy to prevent the illegal diversion of AI technology and protect domestic technology.

This upward revision is based on the forecast that the spread of continual learning models will reshape and surge memory demand.

Bit demand estimates for High Bandwidth Memory (HBM) have been doubled from previous projections. HBM demand in 2028 is predicted to triple the 2027 forecast, and the HBM supply-demand ratio in the same year is expected to be a negative 36%, indicating a worsening supply shortage. Furthermore, the DRAM supply-demand ratio in 2028 is also anticipated to worsen by 9.7%. Broadcom is identified as a strong driver of HBM memory demand.

While individual investors' buying is defending the market's bottom, it is difficult to predict market direction if there is no inflow from foreign investors or institutions at the beginning of the trading day. Analysis suggests that it is important to observe the market's flow after 9:30 AM rather than attributing significant meaning to the current trend, as the market is in the early stages of absorbing selling pressure.

If rates are not raised this time, the anxiety that rates will be raised at the next meeting could pressure the market. The market's growing concerns about the Federal Reserve's ability to effectively control inflation are expected to act as an overall market压制 factor.

Out of 16 officially recognized bear markets or recessions since 1945, only 6 cases saw a recession triggered by the start of an interest rate hike cycle. This suggests that a single interest rate hike alone is unlikely to derail a bull market. Analysis indicates that the economy can sufficiently withstand interest rate hikes as long as nominal GDP growth rates are higher than bond yields.

Looking at the Federal Reserve's interest rate hike periods since the 1970s, on average, once they started hiking, they raised rates six times consecutively. However, there are warnings against relying solely on such averages for simple interpretation. The frequency of rate hikes varies significantly, from 3 to 9 times, depending on the actual situation, so caution is advised to avoid falling into the trap of averages.

The KOSDAQ has already turned positive, and Samsung Electronics and SK Hynix are contributing to reducing the index's decline. It is generally analyzed that the KOSDAQ tends to reflect market sentiment more sensitively.

A strategy of gradually approaching suppressed stocks that have been of interest, rather than aggressive investing, is recommended. Semiconductor materials/components, robots, secondary batteries, and pharmaceutical/bio sectors were mentioned as stock groups to consider for this approach.

A change in foreign selling is expected around the year-end/new year rebalancing period.