US Treasury Buybacks, Bitcoin Surge: Leading Market Normalization?

Last Friday, 'normalization' was the market's keyword, according to Lee Jae-gyu, PB Assistant Manager at SK Securities. The market has experienced significant volatility recently but is now rebounding and entering a stabilization phase. This trend is acting as a positive signal for investors.

Last night, the US Treasury Secretary announced a bond buyback policy. This announcement is likely to serve as an important justification for the current stock price rebound. It is interpreted as providing a positive liquidity signal to the market, improving investment sentiment.

With Bitcoin surging, the possibility of increased liquidity in the market is growing. Assistant Manager Lee Jae-gyu confirmed this trend through Bitcoin-related sites and mentioned the need to expand personal investment ideas. Bitcoin's rally is not limited to the cryptocurrency market but can positively impact the entire market.

Assistant Manager Lee Jae-gyu expects the current market to perform well and believes there is a high probability of additional liquidity supply. This potential for liquidity is considered a crucial factor supporting the overall market upturn.

The current US 30-year Treasury yield is very high. High bond yields can potentially reduce demand for risk assets like stocks. This could lead to increased funding costs for big tech companies and heighten demand uncertainty for memory semiconductor companies.

Assistant Manager Lee Jae-gyu emphasized that when macro indicators suddenly surge, investors should focus on the possibility of them reverting to their original levels rather than assuming continued or further increases, and use this to develop investment ideas. He illustrated the effectiveness of this strategy using the past stock performance of Korean Air as an example.

The US Treasury conducted bond buybacks to stabilize Treasury yields. This has the effect of alleviating uncertainties related to global market funding costs, especially as US Treasury yields remain elevated. The Treasury's intervention is expected to resolve market anxieties and contribute to stabilization.

The decline in US Treasury yields is reviving the AI sector narrative, positively impacting SK Hynix. Furthermore, domestic companies' announcements of shareholder return policies are raising expectations for stock price appreciation. Assistant Manager Lee Jae-gyu explained that the current discrepancy between SK Hynix's stock price and its ADR (American Depositary Receipt) is over 30%, indicating significant potential for stock price growth to close this gap.

The strong surge in Bitcoin is underpinned by former President Trump's call for the passage of the Clarity Act. The Clarity Act aims to incorporate virtual assets into the institutional framework. In particular, stablecoins are generally required to hold US dollar spot or short-term Treasury bonds, so the growth of stablecoins could lead to increased demand for US short-term Treasury bonds.

In the United States, the entities responsible for monetary and fiscal policy are the Federal Reserve (FMC) and the Treasury Department, respectively. Assistant Manager Lee Jae-gyu predicted that global macro-related burdens would ease, at least until the US midterm elections. He also added that the potential for liquidity supply in the market is expanding, including an increase in domestic customer deposits.

SK Hynix closing above its 120-day moving average is a significant indicator of market normalization. After recent short-term fluctuations, it showed a technical recovery, regaining yesterday's losses and surpassing the 120-day line. Assistant Manager Lee Jae-gyu analyzed that if SK Hynix maintains this support, the KOSPI is also likely to enter an upward trend.

SK Hynix announced 40 trillion won in shareholder returns. This amount, representing approximately 3.5% to 4% of its 1,000 trillion won market capitalization, is interpreted as an expression of strong confidence in solid performance from 2027 to 2029, rather than a one-off stock price boost. Contrary to market concerns, this signals robust investment from big tech companies.

SK Hynix's announcement of a shareholder return policy could influence its competitor, Samsung Electronics. Assistant Manager Lee Jae-gyu predicted that if SK Hynix created such an event, Samsung Electronics would likely need to announce a shareholder return policy of at least 150 trillion won. This could raise expectations among Samsung Electronics shareholders.

SK Hynix's forward PER rose to 3.7x-4x as of yesterday. However, Assistant Manager Lee Jae-gyu warned that if US Treasury yields remain high, multiple expansion will be constrained even if companies show earnings (EPS) growth. He emphasized the significant impact of interest rates on the discount rate for growth stock valuations, urging continued monitoring of Treasury yield trends.

Assistant Manager Lee Jae-gyu expects many technology transfer opportunities for domestic pharmaceutical and bio companies in the second half of the year. He advised investors to focus on companies with high potential for technology transfer, especially those with momentum such as the ESMO conference on October 23, rather than looking at all stocks.

PCBs (Printed Circuit Boards) are showing not only rapid sales growth but also a very steep increase in operating profit. Assistant Manager Lee Jae-gyu maintained a positive assessment of the shipbuilding industry and suggested re-examining the power equipment industry. It is important to pay attention to the growth potential in these industrial materials sectors.

Assistant Manager Lee Jae-gyu stated that his current portfolio consists of 25% semiconductors, 25% pharmaceutical/bio (including KOSPI stocks), 20% ETFs, and 30% cash. He noted that there is no major need to worry about the market in September and October, but advised observing market trends from this week to next. The current portfolio reflects weighting adjustments to flexibly respond to market conditions.

Despite the very strong performance of the semiconductor sector, Assistant Manager Lee Jae-gyu stated that he is not aggressively increasing his weighting. He emphasized the need for flexible response to market trends by adjusting weighting rather than going all-in on semiconductors, as sector rotation is possible in other industries. Although the upward trend for semiconductors on charts is likely, a diversified portfolio strategy is crucial for risk management.