KOSPI, Dual Challenges of Rates and Supply-Demand

The KOSPI index turned downwards during trading to 2,454 points, increasing investor frustration.

Foreigners continued selling for three consecutive trading days, and institutions sold nearly 1 trillion won, leading to a decline in the index. Today, September 30, discussions about quarter-end rebalancing continue.

Amid ongoing quarter-end rebalancing today, program selling due to foreign futures selling is increasing volatility.

Currently, the market tends to be affected by supply and demand factors, especially program trading driven by foreign futures.

This analysis suggests that when examining the substance of macro indicators, there is no immediate threat to the stock market.

In mid-September, when the peak AI theory emerged and caused jitters, hyperscalers' earnings announcements overturned it. Google and Amazon, among others, announced solid AI-related earnings and CAPEX investment plans for the second half and next year.

With HBM4 market share expected to be a key driver for future guidance and stock price fluctuations, the potential for Nvidia's Vera Rubin chip price to reach 130-140 million won is further highlighting the importance of the HBM market.

Samsung Electronics showed good results in HBM4 sampling tests and presented market share data approaching 40% in the overall HBM market, which was reflected in its stock price.

If Samsung Electronics secures around 30% market share, it can expect a positive effect of generating profits that were absent after HBM3 8-stack.

If Micron Technology fails to capture 20% market share, Samsung Electronics and SK Hynix's Q4 earnings guidance could be raised. Morgan Stanley raised concerns about AI peaking, but actual semiconductor export performance in August and September was much better than expected, easing the peak theory.

Long-term Treasury yields include a significant amount of speculative trading, so if further interest rate hikes are confirmed, speculative trading may decrease, and long-term yields could subsequently decline.

Unlike traditional interest rate hike periods, an atypical trend has emerged since COVID-19, with technology stocks outperforming bank stocks.

In past market trends, a strategy that goes against individual investors' selling has often been advantageous in terms of returns.

Therefore, at this point, a strategy of holding leading stocks rather than participating in selling is mentioned.

For new entries, it is advisable to approach when the market stabilizes and breaks through resistance levels, and for existing holders, aiming for SK Hynix to break through the 190,000 won level could lead to comfortable trading.

As Applied Materials, Lam Research, and other semiconductor equipment and materials companies showed strength in the US stock market yesterday, the domestic market should respond by applying this trend.

Jusung Engineering is demonstrating performance in the substrate coating field through its atomic layer deposition (ALD) technology, and its market capitalization has risen to 10.8 trillion won.

Equipment stocks can be difficult due to the time lag between orders and earnings recognition, so focusing on material companies like Dongjin Semichem and Soulbrain is also a strategy. Soulbrain, specializing in etching and cleaning processes for HBM mass production, is gaining attention.

Considering the potential for technical upside, it is necessary to focus on P-Optics in the equipment sector and SKC in the manufacturing sector as glass substrate-related stocks.

Bloom Energy's stock price increase reflects this trend, and its rise despite falling oil prices is considered a significant signal.

Among domestic SOFC-related stocks, Mico is mentioned as a company with a stable financial structure, as it is steadily promoting its SOFC commercialization business through its subsidiary Mico Power, based on sales growth in its core semiconductor business.

SeAH Steel operates various businesses such as energy, construction, and shipbuilding, showing stability in terms of versatility.

In terms of profitability, companies with a high proportion of oil country tubular goods (OCTG) sales are advantageous, and Nexteel and Husteel are analyzed to have a high proportion of this.

Considering the limitations of operating profit margins in semiconductor manufacturing, rather than continuous rapid increases of 3-5% like in the past, attention should be paid to the normalization process accompanied by volume growth.

Investors need to separate short-term trading and long-term holding strategies, and it is recommended to focus on fundamental indicators rather than being swayed by news such as the end of share buybacks.

Key indicators for these companies include the maintenance of LTAs (long-term supply agreements), and checking for contract cancellations in terms of duration rather than price.

Due to the nature of manufacturing, operating profit margin growth has reached its limit, so expectations should be placed on volume growth rather than price increases.

The Korean market, where it is easy for foreigners to cash out, sees a concentration of selling volume for portfolio adjustment, regardless of the value of individual companies like Samsung Electronics.

Foreign investment institutions are positively evaluating Samsung Electronics and SK Hynix, yet the lack of active capital inflow seems to be due to the need for further confirmation.

Therefore, foreign selling should be understood as a process of market rebalancing and should not be overly negatively evaluated.

Share buybacks have supported market downside rigidity, but conflicting outlooks are emerging, such as a potential decline after buybacks end or a rebound after foreign selling ceases.

What is important is not the end of share buybacks itself but the movement of macro variables at that time, and if credit issues surface in early to mid-October, market volatility could increase.

In a high-interest rate environment, difficulty in refinancing and rising CDS premiums can lead to credit issues, making the trends of US small and medium-sized regional banks an important observation point.

Amid expectations for an Alaska gas field announcement, pipe and fitting companies, Posco International, and other related firms gained prominence before nuclear power stocks.

In the US market, power shortage issues related to Blue Owl and Bloom Energy's expansion issues have highlighted SOFC (solid oxide fuel cell) related licensing problems, which are also connected to licensing for gas imports.

Solid-state battery related stocks, such as Specialty Chemical and Lake Materials, also showed thematic gains, and news of increased orders for CPO (Co-Packaged Optics) related equipment from Taiwan led to surges in companies like Sungho Electronics.

Amid news of some SMR (small modular reactor) approvals in the US, nuclear power related stocks like Doosan Enerbility and BH also rebounded.

Federal Reserve officials' inflation remarks and companies' pricing strategies, such as PepsiCo, are acting as new factors for rising interest rates.

As growth continues, interest rate control is difficult, and high interest rates are eroding potential growth, so it is necessary to monitor whether growth will slow in the future.

Foreigners' widespread selling in the Korean market led to selling of financial stocks as well, attributed to short-term supply and demand conditions.

Therefore, it is more appropriate to attribute the current decline in financial stocks to supply and demand factors rather than overly linking it to macroeconomic issues.

With the earnings of Micron, SK Hynix, and Samsung Electronics dependent on price effects, and uncertainties in the semiconductor front-end industries unresolved, it is difficult to predict the overall direction of semiconductor stocks.

The reluctance of AI companies like OpenAI and Anthropic to go public or their struggles with costs suggest the need for these companies to prove their earnings, which leads to concerns about semiconductor demand.

OpenAI's hesitation for an IPO despite increasing annualized revenue may be due to internal cost burdens, and Meta's release of free AI models is also influencing the market landscape.

Global investors acknowledge AI's growth potential but are concerned about the erosive effect of high interest rates on potential growth, which acts as a psychological variable for the stock performance of semiconductor-related companies.

While there were rumors of a $54 billion investment in the Alaska LNG project, the Korean government stated it is still in the discussion and review phase and expressed concerns about profitability.

In the past, similar large-scale projects emerged as thematic stocks but repeatedly saw their peaks lower, so Alaska LNG related stocks should be approached cautiously rather than with aggressive buying.

Although there is analysis that former President Trump is using Korea and Japan as leverage ahead of the midterm elections, the Korean government has denied that any investment has been confirmed.

Related steel pipe and steel companies showed short-term thematic gains but also significant volatility with long upper wicks, indicating the need for cautious investment.

Considering these supply and demand conditions, the opening price for the next trading day is likely to start lower, but a surprise like Micron's earnings could lead to the opposite outcome.

However, based on the options expiration date on the second Thursday of October, the overall market still maintains an upward position.

LG Energy Solution and SK On are experiencing delays in factory utilization recovery due to excessive expansion, but Samsung SDI has relatively less burden on utilization rates.

If considering investments in the secondary battery sector in the future, allocating about 10% of the portfolio is analyzed to be effective.

As module and polysilicon prices rise, showing an overall recovery in the solar industry, power shortages in the US and sanctions on Chinese products are benefiting domestic companies.

OCI Holdings is showing long-term growth potential, having confirmed a long-term supply contract with SpaceX, and interest in the solar sector is expected to continue as long as the market does not significantly falter.

Individual stock trading performed relatively well through sector rotation.

For a market breakthrough, new momentum such as quantitative easing or interest rate cuts is needed, but the speaker believes this is unlikely at present, and a US-Iran negotiation settlement seems to be the most realistic expectation.

The main reason foreign investors are selling stocks in the current market is that global bond yields are excessively high.

Global fund managers perceive the sharp rise in bond yields as a risk factor, increasing their cash holdings and selling stocks for risk management within their equity positions.

For foreign capital inflow to recover, bond yields must stabilize downwards, which can then lead to improved investor sentiment towards risk assets.

Stock investment inherently requires risk-taking, and he analyzed that if the current high bond yields, exceeding 5%, stabilize downwards, the market could use this as an opportunity to rise.

The recent three-day stagnation in the domestic market was due to its failure to fully reflect the sharp rise in bond yields during the Chuseok holiday, and the selling by domestic institutions at the quarter-end was also attributed to such events.

He likened making a choice that goes against the crowd in the stock market to a sheep leaving the flock and being caught by a wolf, which can be dangerous.

While making different choices from others can serve as a key investment insight, it requires an attitude of accepting market realities and seizing opportunities through 'discernment' and 'instinct' within that context.

Although the current market is showing dull movements, he emphasized that rather than being too impatient, patience is sometimes needed, and one cannot earn profits without taking risks.

Stocks at the market's core, such as memory semiconductors, physical AI-related stocks (Hyundai Motor, Doosan, LG Electronics), and the energy sector (transformers, etc.), are currently stalled, making the market feel sluggish.

Market expert Park Byeong-chang advised that if the current market feels complicated and trading is difficult, taking a break from the market is an option.

If trading, it's not a market for long-term holding, so a short-term strategy focusing on leading stocks in currently trending sectors is needed.

Given the opaque market conditions ahead, avoid long-term investments based on vague expectations and focus on those with clear momentum.

Expert Park Byeong-chang cited the conventional wisdom that 'the US market is weak before midterm elections and always rises after,' suggesting that such market expectations could play a role.

He analyzed that if the market experiences a correction in October after a difficult September, the sentiment of 'it rises after it's over' could be activated after the midterm elections, leading to market movement.

In particular, he aggressively predicted that Samsung Electronics and SK Hynix could rise to 300,000 won and 2 million won respectively in Q4, explaining that given their resilience amidst current negative factors, they have significant upside potential once these factors are resolved.

The host conveyed Kim Jang-yeol, Center Head's analysis that market interest in semiconductor materials, parts, and equipment (SOBUJANG) stocks has recently surged, but they have almost reached their target prices.

He emphasized that late interest suggests limited room for further stock price appreciation, and caution against overheating is necessary.

Foreign selling intensified around 10:30 AM, leading to a downturn in the KOSPI index.

Despite this large-scale selling, positive factors such as a sharp drop in oil prices, stabilization of US Treasury yields, and gains in Asian stock markets were present, yet foreigners maintained their selling stance.

This algorithmic response by institutions amplifies foreign selling, acting as a factor that widens the market's decline.

News broke that Anthropic plans to raise up to $100 billion (approx. 137 trillion KRW), with investor recruitment starting mid-October and aiming for an IPO before the US midterm elections in November.

Some speculate that foreign investors are withdrawing funds from emerging markets to secure this capital, contributing to the selling of domestic semiconductor stocks like Samsung Electronics and SK Hynix.

However, the participant was skeptical of this hypothesis, arguing that unlike the SpaceX IPO, Samsung Electronics and SK Hynix are not currently at record highs, weakening the justification for concentrated selling.

Foreigners have sold approximately 8-9 trillion KRW over the past three days, with most of it being Samsung Electronics and SK Hynix.

He is also considering a strategy of divided purchases over several occasions rather than buying all at once.

He judged that it is a time to accumulate stocks, even if they are expensive, considering the possibility of entering an earnings-driven market after mid-October and the concentration of big tech companies' earnings announcements.

Attention should be paid to changes in HBM market share in Micron's earnings report, and a nuance of market concern regarding SK Hynix's HBM yield issues has recently been detected.

In the first half, expectations for legacy memory were high, and in the second half, HBM; however, Samsung Electronics is now mentioned more often. Samsung Electronics fell 25%, while SK Hynix fell 35-38%, indicating Samsung Electronics' greater strength.

In terms of supply and demand, institutional buying of Samsung Electronics is stronger, and the possibility of Samsung Electronics Chairman Lee Jae-yong sending a positive signal to the market through large-scale share buybacks was also mentioned.

In particular, debt issues such as the increase in the US fiscal deficit exacerbate market不安 and become a factor demanding further interest rate increases.

Some countries, including China, are pursuing asset diversification strategies, such as reducing purchases of US Treasuries and increasing gold purchases, to lower their reliance on the dollar.

China, which records a trade surplus equivalent to 1% of global GDP, is one such country showing these movements.

Analysis suggests that the attractiveness of US Treasuries is not what it used to be, and investment demand for US stocks is cited as a factor supporting the market.

Analysis of US election data since 1936 shows that the S&P 500 index's average annual return was higher when power was divided between the president's party and Congress.

In particular, when a Democratic president and Congress had divided power, the average annual return was 16%. This suggests that the market positively views a structure where Congress checks a Democratic president's attempts to increase fiscal spending, leading to budget management.

The US Senate has a 6-year term with one-third of its seats replaced every two years, while the House of Representatives has all its seats replaced every two years.

While rising interest rates are a natural phenomenon during periods of improving economic growth, the current speed of interest rate increases is very rapid, heightening market anxiety.

The pace of the 10-year yield increase in September was among the third or fifth steepest in decades.

Bond market liquidity crunch and lack of demand were fully reflected in the recent surge of the MOVE index, a volatility indicator.

No matter how good corporate earnings are, if interest rates rise excessively fast, it is difficult to have a positive impact on the market.

Therefore, the October stock market is expected to see a fierce tug-of-war between strong corporate earnings and a high-interest rate environment.