Post-Chuseok Market: AI Semiconductors and Commodities in Focus

The observation is that there will be two more rate hikes, including this one. However, since the Bank of Japan has not provided clear guidance on the terminal rate, the current neutral rate is estimated to be in the range of 1.1% to 2.5%. The September rate hike is already priced into the market, so sharp volatility is likely to be limited.

The market judges that forced speed control is difficult due to intensifying technological competition, and some view that introducing regulations could instead create entry barriers for competitors and benefit leading companies. Therefore, the assessment is that the argument for slowing AI development is not an issue that would undermine the industry's fundamental growth drivers.

Both countries have a strong tendency to maintain an orderly decoupling, and there are core cards that are difficult to concede, such as China's technology and America's resources. However, the analysis suggests that if intervention in geopolitical conflicts is discussed, it could act as a positive variable for the market.

This could bring minor changes to the fundamentals of the semiconductor industry, but the symbolic meaning is analyzed to be significant. If this change shakes semiconductor sector stock prices, some say it could rather be a buying opportunity. The psychological shock is expected to be short-term.

Major companies such as BYD, Xiaomi, and CATL were included in the delegation, but due to high tariff barriers in the U.S., it is still difficult for Chinese companies to make substantial inroads into the U.S. The dominant view is that it will be difficult to produce substantial results at this meeting.

Western countries have continuously demanded that China appreciate the yuan, pointing out that artificial undervaluation boosts China's export competitiveness and can cause the decline of Western manufacturing. The fact that the yuan's recent weakness has not deepened is interpreted as a positive signal lowering the possibility of financial turmoil.

Both countries recognize the importance of the Taiwan issue, but are more likely to continue a 'managed level of conflict' rather than resolving it in the short term. It is judged that both countries currently need time and justification from each other.

Due to the increasing complexity of AI chips, the importance of back-end processes was once highlighted, but now interest is shifting to front-end equipment. Investment by major global equipment companies such as ASML and Applied Materials is seen expanding. Among domestic companies, the warmth is expected to spread across the semiconductor materials, components, and equipment sector, centering on companies with strengths in niche processes. In particular, for the time being, the equipment sector can be a valid investment destination.

AI infrastructure demand is expected to continue unprecedentedly, beyond comparison with the past. If this AI cycle does not end, in the next stage, not only semiconductor manufacturers but also materials, components, and equipment companies may show greater stock price elasticity. Currently, there is a time lag in benefits from construction and cleanroom stages to equipment installation and then rising utilization rates, but if AI demand remains solid, the rise in materials, components, and equipment companies compared with manufacturers is likely to be prominent.

Rising commodity prices can be partly linked to demand for building AI infrastructure, so synergies can be expected. However, domestic commodity-related stocks are limited, and the view is that investing in overseas commodity-related companies may be more advantageous.

For investing in oil refining stocks, U.S. companies have many more advantageous aspects than domestic companies. U.S. companies secure cost competitiveness as oil-producing countries, while domestic companies have high dependence on Middle Eastern crude and a large transportation cost burden. In addition, the fact that U.S. companies are relatively free from geopolitical risks is also a factor increasing investment preference.

This is intertwined with structural problems in the oil refining industry, and instability in the global supply chain is also having an effect. As a result, prices of refined oil products are likely to remain high for the time being.

A representative example is that France's top market capitalization recently changed from LVMH to L'Oréal. This reflects shrinking luxury consumption and a growing tendency toward recession-style consumption, suggesting that consumers are increasingly seeking the stable value of proven brands. Legacy cosmetics companies such as L'Oréal, Shiseido, and Amorepacific are responding to the changing market through successful restructuring.

In such an environment, there is a high risk that bad news for individual stocks will spread, so investors must establish cautious strategies between policy benefits and interest rate pressure. It is wiser to consider diversified investment rather than concentrated investment in a specific sector.

Recently, ETF products based on various sectors and themes have been launched, making it advantageous for investors to diversify their portfolios. If such ETFs are included in the second-half portfolio, the market may show a better-than-expected flow next year, making it a positive investment idea.

After a rate hike, the market's sensitivity to bad news can generally decrease. Therefore, downward pressure on the market after the Chuseok holiday is expected to be limited, which could be a time for investors to seek low-price buying opportunities.