Sector Rotation Intensifies... Nvidia Earnings, Corporate Governance Reform as Key Variables

Russia's RIA Novosti news agency reported that the United States and Iran had agreed to a ceasefire, possibly to be announced within days. The market reacted immediately to this news, with oil prices and bond yields falling. Park Jong-yeon, CEO, stated, "RIA Novosti, a Russian state-owned news agency, reported that the US and Iran have agreed to a ceasefire and it may be announced within days," emphasizing the impact of such geopolitical issues on the market. Although the veracity has not yet been confirmed, investors are reacting sensitively to these rumors.

As Nvidia's revenue heavily relies on data centers of hyperscalers and big tech companies, the diversification of revenue channels is considered a key point to watch. The market has already factored in expectations after a stock price decline, so this earnings announcement is anticipated to be a crucial turning point for future stock performance. Park Jong-yeon, CEO, explained, "In this Nvidia earnings report, rather than gross margin, isn't Nvidia's overall revenue heavily concentrated on hyperscalers and big tech? It seems there's interest in the diversity of revenue and whether its channels have diversified."

The market recently showed a significant rebound, though it has not transitioned into a bull market. Despite the index starting at -2.4% and hitting a low of -4%, it closed at +0.68%, a 5% increase from its lowest point. This trend is analyzed as a result of supply and demand factors driving the rebound. In particular, semiconductor material and component stocks led the market rebound, dominating the top ranks of KOSDAQ even amid weakness in the biotech sector. Park Jong-yeon, CEO, commented, "It hasn't transitioned to a bull market, but it's a quite significant rebound. Because the market was at -2.4% and the low was -4%. Since the closing price was +0.68%, it went up 5%."

The recent stock market shows an accelerated sector rotation across various sectors, including biotech, secondary batteries, fintech, and nuclear power. In particular, semiconductor material and component stocks like Jusung Engineering and Wonik IPS are leading the market's upturn, positioning among the top KOSDAQ performers. This suggests that liquidity, previously concentrated in established leading stocks, is now spreading to stocks with new momentum. Park Jong-yeon, CEO, explained, "Biotech rises, then secondary batteries, then fintech, that's how it moves these days. When semiconductor material and component stocks all rise like this, it becomes even stronger because liquidity flows in," analyzing that this shift in liquidity is intensifying the sector rotation.

An analysis suggests that while doing nothing maximizes profits in a good market, nimble responses are necessary in sharply declining or highly volatile markets. Investors should actively utilize strategies such as horizontal shifts or pruning for risk management during market downturns. Park Jong-yeon, CEO, advised, "When the market is good, not trading maximizes profits; one should stay put. When the market plunges, one needs to do risk management trading, or horizontal shifts, or pruning. One needs to do such things when the market is not good." In volatile markets, it is crucial to continuously monitor market changes and enhance response capabilities through stock-specific training.

While in the first half of the year, they tended to rebound briefly and then fall, recently they maintain very strong upward trends when they rise. This indicates that individual stocks are exerting their own strength even amid dependence on large-cap stocks like Samsung Electronics and SK Hynix. Park Jong-yeon, CEO, explained, "The difference from the first half is that these stocks are not just rising 2-3% then falling a bit, or attempting a rebound then falling; they are very strong when they rise. Overall, the intensity of the upward trend in this rotational flow has gradually strengthened," emphasizing that market trends are changing.

The necessity of corporate governance reform benchmarking Japan has been raised. There is an expectation that if the governance reform, currently discussed mainly among financial holding companies and financial institutions, extends beyond large corporations to mid-sized companies, it could yield tremendous effects. Park Jong-yeon, CEO, emphasized, "You know the current governance reform. If we are going to benchmark Japan, if the ripple effect of this governance reform extends not only to existing financial holding companies or financial firms and large corporations but also to mid-sized companies, we will see enormous effects." This is expected to contribute to market improvement and overall corporate value enhancement.

Analysis of recent index charts suggests that yesterday's index defense can be interpreted as a signal of maintaining a meaningful upward trend. After hitting a low and rapidly rebounding from the July crash, the low points have consistently risen, showing a repeating pattern of ascent and descent. It is assessed that yesterday, the market successfully defended a potentially collapsing situation, passing a crucial turning point. Park Jong-yeon, CEO, explained, "This is yesterday's chart. This is the July crash, hitting the low, and then a rapid rebound. But if you look closely, the low points are getting higher, like this. This is what we call an upward trend. It's ascending and descending, but yesterday, it could have collapsed. It defended at that point." Whether the 7,500 point target is achieved in the future will largely depend on the release of the U.S. Personal Consumption Expenditures (PCE) price index and Nvidia's earnings. Investors should maintain a wait-and-see attitude on Monday and Tuesday and respond cautiously on a stock-by-stock basis.