Quadruple Witching Day: Foreigners Sell 2.7 Trillion Won in KOSPI

The simultaneous expiration date is when the expiration dates of four derivative products—stock index futures and options, and individual stock futures and options—coincide. This can lead to unexpected and sharp price fluctuations at the end of the trading session.

KRX ETF rebalancing is the process of adjusting the constituent stocks and their weights in exchange-traded funds (ETFs), which can concentrate large-scale trading on specific stocks. The market assessed that the combination of these two factors could dampen investor sentiment until the very end of the trading day.

Some argue that the current interest rate level might be manageable given the fundamentals of the US economy. This perspective suggests that a comprehensive judgment is needed, considering past high-interest rate periods, current economic structure, and corporate earnings.

Conversely, concerns still persist that high interest rates could hinder economic growth and curb corporate investment sentiment. Thus, analysis suggests that an investment strategy based on fundamentals, such as corporate earnings and industry trends, is becoming more crucial than an excessive reaction to interest rate volatility.

Conflicting interpretations of interest rate levels have been identified as a factor that could further increase market volatility depending on the future direction of the Federal Reserve (Fed)'s monetary policy and the release of economic indicators.

On this day, foreign investors recorded a net selling of approximately 2.7 trillion won in the KOSPI market. This large-scale selling volume was concentrated during the closing auction, a period when trades are executed at a single price just before the market closes, allowing large-scale trading by specific supply and demand participants to significantly impact prices.

Despite the sudden large-scale selling by foreigners, individual and institutional investors collectively bought these shares, contributing to mitigating the market shock. Individuals primarily showed buying interest in large-cap KOSPI stocks, while institutions also absorbed a certain volume through program trading.

It was evaluated that this buying by individuals and institutions played a role in defending against a sharp market decline caused by foreigners' large-scale selling. However, considering the intensity and concentration time of foreign selling, vigilance regarding future supply-demand imbalances needs to be maintained.

The foreign selling concentrated in the closing auction was interpreted as a result of complex factors, including mechanical elements like rebalancing, in addition to ordinary investment decisions.

Furthermore, SK Hynix ADR premium is expected to consistently maintain around 30%. ADR premium refers to the phenomenon where the price of overseas-listed shares is higher than the domestic stock price, indicating high preference among foreign investors.

If this valuation reassessment continues, it is projected that SK Hynix's stock price will inevitably rise in the domestic market as well. Especially given the identical earning base, the current valuation gap is expected to gradually narrow.

Compared to the same period last year, it recorded a high growth rate of 53.3%, proving robust demand in the semiconductor industry. These results were interpreted as an important signal raising expectations for a recovery in the semiconductor industry.

TSMC is now assessed to have a higher probability of achieving the upper bound of its previously guided Q3 revenue. As TSMC's revenue acts as a leading indicator for global semiconductor demand, this strong performance is expected to have a positive impact on the entire semiconductor sector.

In particular, TSMC's revenue increase was attributed to rising demand for high-performance computing (HPC) and artificial intelligence (AI) related chips. This is expected to have positive spillover effects on the earnings of domestic semiconductor-related companies.

TSE recently recorded a new high and showed strength, while SamCNS was evaluated to have relatively more room for growth due to its smaller market capitalization compared to TSE.

Probe cards are consumable components used to test the electrical properties of semiconductor wafers, and their demand increases with semiconductor production volume. The strong performance of Taiwanese probe card manufacturers served as a basis for the simultaneous rise of domestic materials, parts, and equipment stocks.

While other companies focused on advanced processes, DB Hitek targeted the niche in the 8-inch wafer market, maintaining stable performance.

The company plans five wafer price increases from June of this year to next year, raising expectations for improved profitability. These price increases are evidence of consistent demand for legacy processes.

DB Hitek maintains a high-profit margin of around 30%, securing stable profitability. This is interpreted as a result of its dominant position in the 8-inch foundry market and efficient production capabilities.

In the long term, the steady demand in the 8-inch wafer market and the effect of price increases are expected to drive DB Hitek's earnings growth.

Meta's head of AI, Alexander Wang, stated that the initial usage of Muse significantly exceeded expectations. On this positive news, Meta's stock price recorded an increase, making it the only big tech company to do so.

Meta is implementing aggressive marketing strategies, including providing 100 million free tokens, to expand Muse's ecosystem. These strategies are interpreted as an intention to accelerate user acquisition and strengthen competitiveness in the AI service market.

Muse's successful early adoption has boosted market confidence in Meta's AI technology and raised expectations for the creation of new revenue models in the future. Particularly for Meta, which heavily relies on advertising revenue, AI services have great potential to become a new growth engine.

While the AI agent market is still in its early stages, Meta's aggressive launch of AI services is expected to influence the AI strategies of other big tech companies. As personalized AI services become more deeply integrated into users' daily lives, the related market is expected to expand further.

Treasury stock cancellation is considered a representative shareholder return policy that enhances per-share value by reducing the number of outstanding shares. Such a corporate decision is interpreted as demonstrating a strong commitment to enhancing shareholder value.

Typically, treasury stock cancellation is interpreted as a positive signal in the market and can raise expectations for stock price appreciation. Especially, large-scale treasury stock cancellation is also taken to mean that the company believes its current stock price is undervalued.

If CPI is announced at 2.7% and the Federal Reserve (Fed) raises interest rates, the market expects this to be 'in the price' and foresees no further interest rate hike pressure. 'In the price' means that the interest rate hike is already reflected in market prices.

However, if the Fed does not raise interest rates despite a 2.7% figure and plays a 'trick,' market interest rates could ironically rise on their own. This phenomenon would lead to the market itself increasing risk premiums as Fed policy uncertainty grows.

Conversely, if CPI is announced at around 2.5%, the likelihood of an interest rate hike decreases, but market uncertainty may still persist. Analysis suggests that market participants need to flexibly adjust their investment strategies according to the inflation data results and the Fed's reaction.

As interest rate hikes significantly impact the overall economy, investors were advised that it is crucial to closely monitor inflation data and accurately grasp the Fed's stance.

Depending on the outcome of the inflation data, the market direction could change significantly, so investors need to exercise caution and respond after confirming the indicators.

In particular, it was pointed out that international oil prices breaking $100 are acting as inflationary pressure on the market. Rising oil prices can lead to increased production costs for companies and reduced consumption, which could act as a burden on the stock market.

As the strong growth of the artificial intelligence (AI) industry continues alongside persistent macroeconomic (macro) downside risks, the market shows a tug-of-war dynamic. In this complex situation, investors are advised to adjust their cash allocation strategy according to their investment propensity. Investors who are extremely averse to losses should increase their cash allocation even further to prepare for risks.

The AI industry is considered a long-term growth engine, but macro variables such as interest rate hikes and economic slowdowns can shake the market in the short term. Investors need to be aware of this volatility and adjust their portfolios based on their own judgment and risk tolerance, rather than simply relying on one or two experts.

Especially when market uncertainty increases, increasing cash allocation to take a defensive position can be a rational choice. This also means securing the capacity to seize opportunities for buying at low points if the market undergoes a correction in the future.

It was suggested that a wise investment strategy involves not being swayed by short-term market fluctuations but rather believing in the long-term growth of the AI industry while preparing for macro risks.

It was argued that investors should move away from past strategies that were solely focused on specific large-cap stocks like Samsung Electronics, Samsung Electro-Mechanics, and Hyundai Motor. The current market shows individual stocks within the KOSDAQ market performing relatively stronger than large-cap stocks. Investors need to explore stock-specific response strategies in line with this market change.

In particular, the method of identifying stocks with upward momentum through chart analysis and rotating investments, as mentioned by Junico last Friday, was emphasized as effective. This approach focuses on uncovering investment opportunities through fundamental analysis and technical analysis of individual companies rather than the overall market trend.

Unlike the period when large-cap stocks led the market, recently, sector-specific or theme-specific rotation is happening rapidly. Therefore, investors should broaden their horizons to various sectors and KOSDAQ stocks rather than concentrating solely on specific large-cap stocks.

It was stated that timing trades through chart analysis of individual stocks is important, and this is a way to effectively respond to market volatility and increase returns.

While it's human nature to want to sell stocks at their peak, realistic advice suggests that the peak can only be known in retrospect. Therefore, it is important to establish a principle of selling in phases over time, rather than trying to predict the peak. Especially for institutional investors, who need to match average selling prices, mechanical phased selling is common.

Individual investors are also advised to buy KOSPI stocks in approximately five phases. This is to avoid being swayed by short-term market fluctuations and to stably manage the average purchase price.

Phased trading helps investors make investment decisions based on objective criteria without being influenced by psychological factors. It was mentioned that through mechanical responses, it is important to minimize losses due due to emotional judgments and pursue stable returns.

Analysis suggests that trading strategies should vary depending on an investor's personality and investment horizon. For stable large-cap stocks like Samsung Electronics, a strategy of buying at dips from a mid-term investment perspective is effective. This approach involves approaching with patience, looking at the intrinsic value of the company even if it fluctuates with market conditions.

Conversely, for stocks that show short-term sharp fluctuations like Robotize, it was warned that buying on a red candlestick is likely to lead to being stuck with the stock. For such stocks, a trading strategy of chasing when a green candlestick appears is more appropriate. Chasing a green candlestick means following strong upward momentum, but it is essential to manage risk by clearly setting stop-loss criteria.

When chasing, if the predefined loss tolerance is exceeded, it is crucial to cut losses decisively to prevent further losses. This is one of the core principles of short-term trading. It was emphasized that establishing an appropriate trading strategy, considering one's investment propensity, target return, and risk tolerance, is important.

In conclusion, it was explained that rather than applying a uniform trading strategy to all stocks, flexibly responding by comprehensively judging the characteristics of individual stocks and market conditions is the path to successful investment.

On this day, market observed supply and demand distortions due to ETF rebalancing. In particular, large-scale selling of over 1 trillion won occurred in SK Hynix, and these funds flowed into semiconductor materials, parts, and equipment (Sobu-jang) related stocks. This phenomenon occurs as ETFs mechanically adjust their portfolios according to predefined criteria.

Concurrently, foreign investors offloaded approximately 5 trillion won in the domestic stock market. This large-scale foreign selling, coupled with rebalancing, significantly impacted the overall market supply and demand.

Therefore, even though Sobu-jang stocks showed gains of over 10% on this day, it was analyzed that it would be difficult to interpret this as a 'true rebound.' This is because it is likely a short-term phenomenon caused by mechanical supply and demand factors.

Investors were advised that rather than blindly trusting stock movements caused by involuntary supply and demand factors like ETF rebalancing, cautious investment is necessary, considering corporate fundamentals and industry trends comprehensively.

This serves as a personal AI assistant that individuals can use in their daily lives, and it holds great significance for having solved technical challenges such as security and delegated authority.

Personal AI agents can leverage user data to provide customized recommendation features. For example, they can recommend personalized information or products by understanding user interests or preferences. This not only enhances user experience but also has the strong potential to act as a catalyst for increasing advertising revenue, Meta's core business.

This is because AI agents can precisely analyze user behavior patterns and preference data to provide more targeted advertisements. Meta aims to create new revenue models through these personal AI services and secure a competitive edge in the AI market.

Although still in its early stages, Meta's aggressive launch of AI services offers important implications for the future AI strategies of IT companies. As personalized AI services become more deeply integrated into users' daily lives, the related market is expected to expand further.

Statistically, September and October tend to show a 'slow' market where stock prices take a breather. This period coincides with institutions finalizing their annual profits and restructuring their portfolios. Many institutions aim to lock in their year's earnings, adopting a defensive rather than aggressive investment stance.

Additionally, after the US midterm elections and the summer vacation season, institutions return to the market, leading to an increase in bond issuance and corporate deals. Such increased activity can put upward pressure on market interest rates, potentially negatively impacting the stock market.

Institutional portfolio adjustments can lead to large-scale selling or buying, increasing short-term market volatility. Therefore, investors need to closely monitor changes in market supply and demand during this period and approach with a conservative perspective.

Historical patterns show that September and October often represent a period of consolidation before the year-end shopping season. It was mentioned that understanding these seasonal characteristics and formulating an investment strategy is crucial.

Market vigilance is heightened regarding the upcoming Federal Open Market Committee (FOMC) meeting. In particular, the worst-case scenario of a rate hike combined with a hawkish policy shift is feared. This is because it could lead to rising short-term interest rates and increased uncertainty in risk premiums, causing significant shock to the market.

If the FOMC raises interest rates and issues strong hawkish remarks, the stock market is highly likely to fluctuate sharply in the short term. In such a situation, investors were advised that it would be wise to maintain a wait-and-see attitude and approach cautiously rather than expanding stock allocations.

While the market has largely priced in expectations for an interest rate hike, if an actual rate hike is accompanied by a firm hawkish stance, it could have a greater impact than anticipated. Specifically, increased funding costs for companies and reduced consumption are risk factors that could lead to an economic slowdown.

Therefore, investors were emphasized to meticulously analyze the FOMC meeting results and be prepared to flexibly adjust their portfolios according to the future direction of the Federal Reserve's (Fed) monetary policy.

An official from the US Treasury Department asserted, "If China gets ahead in AI, everything else is meaningless," emphasizing that AI technological superiority is directly linked to national security and economic prosperity.

These remarks reflect a sense of crisis that if the US falls behind China in the AI sector, it could lose dominance in all other technological fields. Therefore, it was argued that there is a need to actively make the public and investors aware of the necessity for large-scale investment and innovation in AI technology development.

The US government holds the perception that mastering AI technology can lead to dominance in all other fields, implying that the AI competition is a total war between nations, beyond merely a technological race. From this perspective, it was also interpreted that the market sentiment encourages supporting the US in winning the AI hegemony competition.

In conclusion, AI has emerged as a core driving force of future industries and a decisive factor determining national competitiveness, and the US has declared its intention to concentrate all its capabilities to achieve absolute superiority in this field.

A high Friday closing price can be interpreted as a strong intention for upward movement.

Conversely, if the Friday closing price is low, it can be seen as an intention for downward movement. This could be a strategic move by entities managing large funds to establish favorable prices ahead of the next week's expiration settlement.

Therefore, investors need to closely monitor the Friday closing price during expiration week, especially the closing positions of leading sector stocks like semiconductors. This can help predict the overall market sentiment and the movements of key sectors in the following week.

It was analyzed that the market's volatility can increase leading up to expiration settlement, so it is important to gauge the intentions of major players through the Friday closing price and formulate investment strategies accordingly.

Since the COVID-19 pandemic, the domestic stock market has been strongly driven by artificial intelligence (AI) momentum rather than traditional economic cycles. The semiconductor sector, without a doubt, plays the most crucial role in this AI momentum. Semiconductors provide essential hardware infrastructure for AI technology development, directly enabling the growth engine of the AI era.

Recently, semiconductor stocks have shown significantly stronger performance than the overall market even during correction phases. This is interpreted as a reflection of high market expectations for the AI growth story, coupled with conviction in the recovery of the semiconductor industry.

Therefore, as long as the strength of semiconductor stocks continues, the market's upward trend based on AI momentum is likely to be sustained. However, if even semiconductor stocks experience a significant downturn, it could signal not only weakening AI momentum but also the full impact of broader market headwinds.

In conclusion, the movement of the semiconductor sector is a crucial indicator for gauging the direction of the current stock market, and investors were emphasized to closely monitor semiconductor industry trends and related stock movements.

The most notable supply-demand characteristic on this day was the phenomenon of individual investors net selling nearly 2 trillion won in the KOSPI market. The large-scale selling by individual investors is interpreted as a reflection of short-term market anxiety or profit-taking desires.

Conversely, foreign long-term funds have a characteristic of not easily surfacing. Such funds typically begin to be recognized in the market only after significant accumulation has taken place. This suggests that foreign long-term investors are steadily building their portfolios, focusing on the potential of the domestic stock market or the growth of specific sectors.

The large-scale selling by individuals and the subtle accumulation by foreign long-term funds can be interpreted as a positive signal from a long-term perspective, even amidst short-term market turmoil. This is because the increase in foreign funds' equity in domestic companies through buying at low points demonstrates confidence in the future market.

Therefore, investors were advised that rather than being swayed by short-term individual selling, they should analyze the market from a long-term perspective by understanding the movements of invisible foreign long-term funds.