5% Interest Rates, AI, US-China Relations: Stock Market Keys

This is analyzed to be due to weak demand for US Treasuries and strong economic indicators such as manufacturing PMI at 57 and services PMI at 58, which could increase the likelihood of interest rate hikes.

Higher Treasury yields have burdened the stock prices of big tech companies like Oracle and companies with debt management concerns, leading to some adjustments.

WTI remains in the low 90s, and Brent crude is around $94, both having seen about a 2% adjustment.

Current oil prices are at the lower end of the trendline, and there is an opinion that falling below $90 would be a positive factor for future oil price trends.

As a result, Bloom Energy recovered its previous day's 4% loss, surging 8%, and attempting to break through its technical trading range.

Tesla's announcement of its next-generation roadmap on October 3 and the acceleration of Optimus robot mass production continue to provide momentum for robot-related companies.

There was mention of a partial tariff reduction agreement and discussions on AI guardrails, but concrete solutions to key issues were not presented.

The next meeting is scheduled for November.

Some also view this summit as a routine event.

Following the emergence of personal AI agents like Muse Spark, there has been a phenomenon of declining bank and brokerage stock prices.

Concerns are being raised that AI agents could negatively impact bank profitability by finding financial products with the highest interest rates and optimizing customer assets.

Unlike smartphones, glasses operating as voice-based personal AI agents minimize user intervention through background cloud computing. By removing camera modules, they protect privacy and prevent academic dishonesty, and the market for related components like microphones and speakers is expected to expand. The industry mentioned that AI will handle complex processes like reservations and discount checks, leading to innovative changes.

Smart glasses can perform tasks with minimal user intervention through voice recognition and background cloud computing.

These changes are expected to lead to an expansion of the related component market for microphones, speakers, connectors, and semiconductors, driving an increase in demand for low-power chips.

In the past, price increases were reluctantly accepted, but now customers are responding positively and are receptive to price hikes.

This is not just a short-term phenomenon but is recognized as an inflection point where the fundamentals of the memory semiconductor market are changing due to increased computing demand from the spread of AI agents.

Micron has repeatedly shown a 'sell on news' pattern where its stock falls after an earnings surprise, and analysts' earnings forecasts are currently being consistently revised upwards.

Amid heightened market expectations ahead of Samsung Electronics' Q3 preliminary earnings announcement, concerns about earnings due to exchange rate issues are not expected to be significant thanks to the favorable price negotiation atmosphere.

Service and manufacturing PMIs exceeded expectations, confirming an economic expansion phase, which also reduced the likelihood of a retreat in interest rate hike forecasts. With the US 10-year Treasury yield hitting 5.21% and high interest rates persisting, the key for the market was whether companies could realize profits amid macro pressure.

The Purchasing Managers' Index (PMI) for both the services and manufacturing sectors exceeded expectations, once again confirming that the US economy is in an expansionary phase, thus reducing the likelihood of a retreat in interest rate hike forecasts.

In this macro environment, whether companies can realize profits has emerged as a key issue, and Micron's earnings announcement is analyzed to be the most important from a psychological perspective.

Despite the presence of top AI company executives, the summit concluded without concrete achievements, only two pandas, leading to some disappointment.

A former US Assistant Secretary of State for East Asian and Pacific Affairs commented, "Pandas are cute, but what we need is rare earth," pointing out the lack of achievement from the summit.

Even amidst this lack of achievement, the Bitcoin cryptocurrency market has shown slight fluctuations above $84,000, maintaining a stable trend without clear direction.

Just a day after reports of Iran rejecting a ceasefire and hinting at retaliation, President Trump directly stated, "There could be more talks with Iran this week," rapidly changing the conflict situation with Iran.

According to multiple sources, there is a possibility of follow-up indirect negotiations on the 28th, and market focus is on the possibility of additional talks before the Iranian Foreign Minister, attending the UN General Assembly, departs.

This is interpreted as a strategy to keep the negotiation channel open while maintaining pressure, and current oil prices are in the low 90s, considered within a manageable range.

Reports emerged just two weeks after Meta launched its AI agent 'Muse' that a security vulnerability potentially allowing misuse of personal information had been discovered.

As security-related issues are also being reported by other major AI companies like OpenAI and Anthropic, the need for enhanced cybersecurity is becoming even more prominent with the development of the AI industry.

These AI-related security issues are expected to be prolonged, and in Korea, momentum is building for cybersecurity-related companies such as Sands Lab and Genians to gain attention.

Investors who bought below 255,000 won and are sitting on over 10% profit would benefit from holding their shares even after the ex-dividend date.

On the other hand, investors who bought above 255,000 won or have less than 10% profit should consider selling some shares today, taking into account the additional downside risk from the ex-dividend date and tax burdens.

Meta's Muse download numbers were more than double that of ChatGPT, demonstrating the potential of the AI agent industry with tangible figures beyond mere expectations.

This indicates that the robust growth of the AI industry is a key factor supporting the market despite interest rate hike pressures.

Therefore, it was suggested to utilize semiconductor-related stock adjustments as buying opportunities, with selective interest in semiconductor materials, parts, and equipment (SoBuJang) companies rather than Samsung Electronics or SK Hynix.

Shipbuilding stocks have high price attractiveness due to confirmed industry improvement factors like increased LNG/LPG cargo volume, but stock movements remain minimal.

The stock prices of major shipbuilding companies like HD Hyundai Heavy Industries and Samsung Heavy Industries are moving within a box range, showing no clear direction yet for a trend reversal.

Hedging strategies against exchange rate volatility vary by company, but since current exchange rate volatility is not beyond the hedging range, the price merit is judged to remain valid if there is no additional downward pressure.

The US 10-year Treasury yield soared above 5.2% before settling back to the 5.1% range, but the rapid pace was identified as an issue.

It was mentioned that Saudi Arabia's crude oil exports increased by 80% month-on-month, marking the highest cargo volume since the war, and oil prices hovered around $92.

The market showed relief as expectations for negotiations between Iran and Israel formed, influencing the rise of US stocks on Friday.

Meanwhile, the US-China summit concluded with meager results, merely confirming the positions of both sides without a joint agreement.

Samsung Electronics recorded a consecutive rise for seven trading days, and if it rises today, an eight-day consecutive increase is expected.

Foreign investors sold approximately 1.2 trillion won worth of Hynix shares, and a shift of these funds to Samsung Electronics has been observed.

Analysis suggests that expectations for a 4,600 won dividend are influencing investor sentiment.

Pado's performance improvement is becoming visible as demand for customized SSD controllers for hyper-scalers increases. Pado, which has expanded its customer base including M7, is expected to turn profitable with an operating profit of approximately 35.5 billion won in Q3, with Q4 earnings forecasts also likely to be exceeded.

The company is expanding its customer base targeting hyper-scalers such as M7 and is recognized for its capability to provide optimized SSD controller solutions tailored to the needs of each hyper-scaler.

Pado is not merely manufacturing SSDs but is providing optimized controller solutions to manage ESSDs, thereby meeting customer requirements and earning market recognition through its performance.

This company, well-known as an excellent partner for Samsung Electronics and Micron, drew market attention as this supply deal was highlighted.

IBK Investment & Securities published a report containing this information.

Amid ongoing US-China tensions, there are expectations that domestic CDMO companies could benefit if the US regulates WuXi Biologics. Samsung Biologics, one of the world's top 5, is analyzed to be able to improve its constitution through volume benefits.

However, it is pointed out that stock prices often fluctuate wildly based solely on expectations, as seen in past cases like Kolon TissueGene's Invossa and SillaJen's Pexa-Vec. With relaxed listing requirements, an increasing number of biotech companies with insufficient technological capabilities are receiving special listing benefits, increasing the risk of delisting, CB issuance, and capital increases for small and medium-sized biotech firms. Therefore, it is suggested to invest primarily in companies that possess original technology and can generate actual sales, such as Alteogen.

Large robot companies like Rainbow Robotics and Doosan Robotics are not yet seeing concentrated demand. Recently, small and medium-sized stocks with individual issues, such as Robotis, have shown strength, but it's possible that demand will shift to large-caps when this rally takes a break.

Therefore, selecting the right robot stocks is crucial, and a strategy of selecting performance-based companies and targeting small and medium-sized stocks that haven't risen much is needed, rather than aggressive chasing.

Also, cyclical stocks like oil stocks require portfolio adjustment, and focusing on semiconductors rather than linking robots to automobiles is deemed more suitable for market trends.

Semiconductors account for half of Korea's exports, so they must continue to be monitored.

It was mentioned that Samsung Electronics and SK Hynix should be viewed together, and for those who cannot choose, a 50/50 investment was suggested as acceptable.

HBM, in particular, will continue to be necessary, and while companies like Micron have the technology to produce it, they cannot match Korean companies in terms of market share, making them unique. HBM leader is Hynix, and DRAM leader is Samsung Electronics, both still holding attractive points.

Even with the fading expectations for easing US-China advanced technology regulations, the two representative Korean companies, Samsung Electronics and SK Hynix, should be closely watched, and the AI narrative can be sustained.

Competition in general-purpose semiconductor fields is intensifying due to China's rising market share in legacy semiconductors. HBM is a highly difficult area for China to enter and is considered Korea's technological weapon. In the mid to long term, a strategy of focusing on advanced process fields such as HBM is effective.

Focus on HBM may affect DRAM supply, and attention should be paid to advanced process equipment stocks with technological superiority.

Amid tightening regulations on cloud AI, on-device AI, being technology directly embedded in devices, can be relatively free from regulations.

Companies like Open-edge Technology, which possess MPU design IPs, can gain attention in this environment.