Korean Stock Market Faces Resistance and Oil Price Pressure

Experts believe that the movement after interest rates reach 5% will act as a support or resistance level for the market, determining the future direction of the stock market. Rising interest rates generally have a negative impact on risky assets, likely acting as downward pressure on the stock market.

In particular, energy price instability is deepening, with gasoline and diesel prices surpassing previous highs in U.S. society. This, combined with geopolitical risks, is a major factor increasing concerns about U.S. inflation indicators, although core CPI is expected to meet consensus.

Samsung Electronics has a resistance zone of about 30 trillion won, and SK Hynix has about 35 trillion won, which could act as significant resistance to index gains. Such resistance zones limit stock price increases and trigger corrections.

The KOSPI's 12-month forward PER (price-to-earnings ratio) is currently at its lowest level compared to the past. An unusual situation has occurred where the earnings per share (EPS) growth rate is rising, but stock prices are falling. This is seen as a phenomenon caused by the possibility of downward adjustments to third-quarter earnings due to the strong won. However, some view this as an investment opportunity, given that these negative factors have already been priced into the market.

The buying spree of other corporations, amounting to 1.6 trillion won, is a major factor supporting the market's downside. Share buybacks, in particular, have limited the decline, but there is a possibility that the buybacks, scheduled to end in mid-November, could be brought forward. In the case of SK Hynix, the share cancellation issue is expected to act as a positive variable, but the cessation of share buybacks could burden the market.

A reversal of this won depreciation is expected to occur from mid-September to around October, showing a stable trend rather than a sustained strong uptrend.

China's CXMT's DRAM market share has surged to 10% in just one year, attracting industry attention. This rapid pursuit by Chinese companies amplifies concerns about the technological gap in the semiconductor market. While spot prices remain strong, explosive growth in the semiconductor industry requires new technological momentum, and currently, such catalysts are lacking.

The practical validity of Long-Term Agreements (LTAs) is re-emerging as a factor to be re-evaluated during the downturn. Next summer is expected to be a critical time for the re-evaluation of semiconductor company values based on LTAs.

This is analyzed to stem from differences in investment entities and investment horizons between the U.S. and Korea. In the long term, this premium gap is expected to converge, which becomes an important variable for investors to consider.

More important than the interest rate decision at the September FOMC is the Fed's Summary of Economic Projections (SEP). The Fed appears to be placing greater emphasis on boosting economic growth to combat inflation. Long-term inflation expectations remain stable, leading to the analysis that the Fed will reflect expectations for growth more than inflation.

There is also a view that even if interest rates are raised, it could be interpreted as a hawkish hold. Such differences in outlook could increase market volatility depending on future Fed announcements.

This includes changes in various aspects, such as re-examining how economic indicators are utilized, monetary policy communication, balance sheet management, and economic data interpretation. These changes may require market participants to adopt new response strategies.

While some parts of the market raise concerns about the unwinding of the yen carry trade, others consider this an overanalysis. However, it is important to note that if the Bank of Japan (BOJ) raises interest rates faster than expected, it could have a sudden impact on the market in the short term.

If the market is shaken by macro issues, this could be utilized as an opportunity for bargain hunting in AI-related stocks. The current market squabble can be seen as a tug-of-war between liquidity contraction and AI investment.

This is because U.S. Treasury buybacks (TGA account) and stablecoin-related legislation play a role in supplying liquidity to the market. This shows that a different form of liquidity defense mechanism is operating than in the past.

The U.S. is short of long-term funds (buyers of Treasury bonds), while China is unable to find suitable investment avenues. Due to this mutual need, there is an expectation that an agreement might be reached where China ceases selling U.S. Treasuries.