Foreigners Sell ₩2.4 Trillion Net, Yet Decline Narrows

Kim Jang-yeol, an expert, explained that an ₩830 billion facility investment is underway, targeting completion in 2028, driven by AI-related issues. However, he noted uncertainty about how new this investment truly is.

The significant prior decline in shipbuilding stock prices also contributed to the current robust rise. There was also an analysis suggesting that existing target prices might have already reflected these investment plans.

Foreign investors recorded a large-scale net sale of ₩2.4 trillion in the domestic spot market. As a result, KOSPI closed down 1.76% and KOSDAQ 1.95%.

However, pension funds and other corporate investors stepped in to buy, showing動き to prevent further declines. Caster Hong Sun-ae reported the market situation, saying, "Foreigners seemed to have bought for a few days, but today there was a net selling trend of ₩2.4 trillion in the spot market."

It was anticipated that without this buying spree, the market's decline would have been even greater.

OliX is expanding its business from liver treatment to skin and hair follicle areas.

Lee Kwon-hee, an expert, explained, "OliX's mRNA treatment is hot, and now its hair loss treatment is also hot. Two of its major pipelines are currently attracting attention."

The hair loss treatment is being developed based on a mechanism for treating male-pattern baldness using a gene-targeting approach.

Most bio companies have a deficit structure focused on R&D, requiring more caution in investment during periods of rising interest rates. High interest rate environments tend to negatively impact investment sentiment in the bio sector.

Therefore, it is crucial to seize investment timing when uncertainties are resolved, according to the analysis.

Cosmetics stocks had been heavily corrected due to profitability concerns from a strong Korean won, but they reversed to an upward trend ahead of the holidays, fueled by expectations of increased tourist demand. Lee Kwon-hee, an expert, explained, "Why did cosmetics stocks rise today? They were heavily discounted as victims of the strong won, with concerns about profits dropping by over 10%... But it seems they are looking at demand from tourists and other factors before the holidays."

Improved third-quarter earnings forecasts also acted as a positive factor. Amid macroeconomic uncertainties, cosmetics stocks are attracting investor attention due to their defensive characteristics.

Taewoong historically focused on wind power but has shown moves to expand its portfolio with the addition of the SMR business. This is seen as a reflection of expectations for SMR market growth.

According to a Wall Street Journal report, news emerged that South Korea and the United States are close to an agreement on a $100 billion investment in the U.S. Lee Kwon-hee, an expert, stated that Minister Kim Jung-kwan is currently visiting the U.S. to finalize investment negotiations, with talks ongoing before the final signing.

Expectations for the promotion of 8 domestic nuclear power plants continue in the market. These large-scale investments and nuclear power plant construction projects are expected to have a positive impact on related industries.

However, it was also suggested that once the news is officialized, it could act as a 'sell-on' event, as the positive impact might be temporary.

Murata's decision to discontinue low-end MLCC (Multilayer Ceramic Capacitor) products, which are not profitable, is causing ripples in the market. Lee Kwon-hee, an expert, stated, "Murata essentially said they would discontinue MLCCs that don't make money. They will stop making low-end products, discontinuing them."

Large MLCC manufacturers like Samsung Electro-Mechanics are focusing on high-end products for AI servers, so Murata's discontinuation decision is highly likely to benefit smaller component companies such as Amotech and Samwha Condenser, which supply low-end products. Amotech, in particular, specializes in MLCCs for communication networks rather than servers, giving it differentiated competitiveness.

If there were no macroeconomic issues, large companies like Samsung Electro-Mechanics and Murata would typically see their stock prices rise together, but in the current market environment, the ripple effects on smaller companies are expected to be more pronounced.

Kim Jang-yeol, an expert, stated, "They are currently in the red. But news has begun to emerge that they will turn profitable from Q3."

From next year, earnings are expected to grow significantly, leading to substantial earnings leverage. Kim explained, "They will jump from next year. And because the margins are good, there will be a lot of earnings leverage from next year."

The valuation for next year is projected to be around 10 times, but it remains high based on this year's figures.

Lee Kwon-hee, an expert, said, "They are preparing for that, but it hasn't been officially announced yet, so considering that potential, the current position was quite neglected, so I personally think a good stock movement will emerge from that position, and the atmosphere won't be bad."

If this potential materializes, it is expected to be a positive factor for Samsung Electro-Mechanics' stock price. Currently, it is an overlooked stock in the market, so it is necessary to monitor the stock movement based on future official announcements.

Concerns were raised that security-related stocks face intense competition due to the large number of listed companies and the potential for poor performance. Lee Kwon-hee, an expert, expressed a negative view, stating, "There are many [companies], and the fact that many are listed means there are also many unlisted companies. So, conversely, competition is very fierce, they don't make much money, their performance. So, I think it's right not to invest in security stocks."

In the case of Xgate, its annual operating profit is only ₩3.8 billion, yet its market capitalization reaches ₩350 billion, indicating it is overvalued compared to its performance. This led to the judgment that, due to a lack of global competitiveness, its investment value is low beyond a short-term thematic approach.

Therefore, security stocks are strongly influenced by short-term issues rather than fundamentals, requiring particular caution from investors.

While some anticipate a 70% rate hike, the possibility of a freeze is also raised depending on the CPI figures.

Market fatigue and immunity to rising Treasury yields are perceived to have formed, suggesting that the stock market decline during an interest rate hike may not be as severe as expected.

Lee Kwon-hee, an expert, explained, "The bid was quite high. That means there's demand. Among them, indirect bidders, i.e., overseas demand, increased significantly. If the U.S. doesn't collapse, this level, though it could go higher, is at least attractive."

In particular, the increase in demand from overseas institutional investors (indirect bidders) was prominent, leading to a market bottom theory that a price floor could be forming at the current level. Investors appear to judge that at this level of interest rates, it is an attractive investment as long as the U.S. economy does not collapse.

The results of additional 20-year and 30-year bond auctions scheduled for September 24 are expected to be a crucial turning point for the market. The direction of Treasury yields and the overall market will be determined by these auction results.

During periods of rising interest rates, it is crucial to focus on stocks with high earnings visibility rather than growth stocks, where future profits are difficult to pull forward. Kim Jang-yeol, an expert, emphasized, "If rising interest rates are a burden, you should buy stocks that can overcome that. But at least don't sell those stocks. Stocks with numbers coming out for this year and next year, for example, shipbuilding stocks. And semiconductor stocks."

Shipbuilding and semiconductor stocks with clear earnings forecasts for this year and next year were presented as prime examples. The opinion was that there is no need to reduce holdings simply because of interest rate hikes.

Demand for AI semiconductors is expected to continue for the next 12 to 18 months. Strong demand for AI-related technologies is still confirmed, with the rental price of NVIDIA H100 surging.

However, rather than unilateral optimism about AI-related stocks, a cautious approach was suggested. Kim Jang-yeol, an expert, advised, "We're not selling all AI, nor shorting it, but reducing some and diversifying into other cyclical or value stocks with a similar barbell strategy."

In other words, it suggests diversifying risk through a 'barbell strategy' by reducing the weight of some AI stocks and diversifying into cyclical or value stocks. Ultimately, the analysis concludes that investment in companies with proven profitability is key.

Oracle's high RPO (future revenue) was confirmed, but temporary deterioration in cash flow due to cloud data center investment has appeared. Kim Jang-yeol, an expert, explained, "There's a time difference between when Oracle invests and when it recovers the money. Free cash flow keeps worsening by that difference. But that will be fine once one cycle is over."

This can be compared to a long-term investment cycle, like ginseng farming, which takes about six years. There is a significant time lag in recovering profits from large-scale infrastructure investments, which is analyzed as an unavoidable process.

Therefore, in Oracle's case, the effectiveness of infrastructure investment and profit realization should be evaluated from a long-term perspective rather than short-term cash flow.