US Treasury Yield Drop Leads Market Rebound, Semiconductor and Nuclear Power Investments in Focus

The recent decline in US Treasury yields has been the biggest positive factor for the domestic stock market rebound. Despite mixed trends in the US stock market, domestic semiconductor-related stocks rose, overcoming noise thanks to this positive news.

Researcher Kim Jang-yeol stated, "Because US Treasury yields went down, that's the biggest positive," emphasizing the positive impact of falling bond yields on the market.

A list of companies that could be linked to the first or second US investment projects is expected to be announced soon. These are highly likely to be related to materials, parts, and equipment (SooBujang) companies.

Researcher Kim Jang-yeol explained, "You can consider the first or second US investment projects to be linked to SooBujang." Discussions about three major mega-projects—semiconductors, nuclear power, and construction—were also mentioned as possibilities.

SK Hynix union rejected the provisional agreement on wage and collective bargaining by 50.1% of votes. The union is demanding an increase in cash dividends, while the market is divided between concerns over reduced cash dividends and expectations of an agreement through renegotiation. Some believed this rejection put downward pressure on the stock price, but the subsequent recovery seems to reflect demand-supply sentiment.

Researcher Kim Jang-yeol commented, "Isn't it that they want more cash? That's somewhat different from what the market wants," suggesting a divergence between the union's demands and market expectations.

The subsequent stock price drop acted as a short-term negative due to the union's rejection of the agreement, but over time, the stock price recovered. This suggests that the market is not overly concerned about the issue in the long term, or it anticipates a positive outcome through renegotiation.

In conclusion, the union's rejection of the wage agreement caused confusion in the market regarding the company's cash dividend policy, but overall supply and demand conditions and market expectations played a larger role, leading to stock price stabilization.

Korean semiconductor companies are facing concrete demands from the US government to build High Bandwidth Memory (HBM) production facilities within the United States. This could impose new investment burdens on Korean companies.

Researcher Kim Jang-yeol commented, "The biggest thing was that they essentially demanded semiconductor companies build HBM in the US," explaining the significant weight of such pressure.

Some raise concerns that these US investment demands could lead to oversupply. However, others view it as a positive momentum for domestic materials, parts, and equipment (SooBujang) companies, as constructing plants in the US could increase opportunities for domestic SooBujang companies to co-advance or supply equipment.

The US government's announcement of $17.5 billion in financial support for the nuclear power industry has led to a widespread positive assessment of domestic nuclear power-related stocks. This is expected to be a significant catalyst, increasing the possibility of a 'renaissance' in the nuclear power industry.

The nuclear power industry is expected to create new synergy effects as it can play a crucial role in meeting the surging electricity demand from data centers. Korean nuclear power companies, in particular, are likely to secure a competitive edge as early movers.

Researcher Kim Jang-yeol commented, "It seems nuclear power is making a comeback. It's only a matter of time. The stock level rose, then paused a bit, didn't it? So, this is good to see as a 'dip' or correction point," emphasizing the upward trend of nuclear power stocks and investment opportunities during such dips.

This positive outlook is expected to provide new growth drivers for domestic companies with nuclear power technology and experience. It is being re-evaluated as a crucial industry that can contribute to energy security and achieving carbon neutrality goals in the long term.

Interest rate sensitivity varies by industry sector, necessitating a portfolio strategy that accounts for this. The construction and cosmetics sectors tend to move with their own momentum, largely independent of interest rate fluctuations.

In contrast, the biotech and secondary battery sectors are highly sensitive to interest rates, requiring a staggered buying approach or a long-term strategy for investment. Team Leader Lee Kwon-hee advised, "Biotech and secondary batteries fundamentally have interest rates weighing on them, so there's volatility. Therefore, one needs to take a longer-term view or divide purchases more. Construction and cosmetics, on the other hand, are virtually unrelated to interest rates."

Hyundai Motor's Investor Day was held, but the reason behind Hyundai Glovis's stock price increase has not yet been clearly confirmed. Market expectations are high that Hyundai Glovis will play a key role in the restructuring of the Hyundai Motor Group's governance.

Team Leader Lee Kwon-hee mentioned, "People say Hyundai Glovis could be the main player in the governance restructuring line."

However, since Hyundai Glovis was not specifically assigned a role related to robotics at the Investor Day, doubts were raised about whether the current stock reaction aligns with these expectations. In other words, expectations for governance restructuring remain, but further confirmation is needed regarding its immediate connection to the robotics business.

In the past, there was much skepticism about the competitiveness of domestic companies in the robot actuator industry due to low-cost offensives from Chinese companies. Concerns were high that Chinese products would dominate the market.

However, the situation has changed recently as the US moves to exclude Chinese companies from key industries. Team Leader Lee Kwon-hee explained, "The thought was that if Chinese products came in, they couldn't be beaten in making actuators. But the moment the US excludes them, what happens? We have to look at it again, like with secondary batteries."

This implies that just as the secondary battery industry found opportunities for domestic companies due to China's exclusion, the robot actuator industry also now has factors that could bring Korean companies back into focus.

The memory semiconductor market is divided into DRAM and NAND Flash, with each market showing significant differences in entry barriers and competitive structures. The DRAM market has very high technological barriers, limiting the influence of Chinese companies.

Researcher Kim Jang-yeol stated, "Yangtze Memory is more likely to cause chaos in the NAND market than ChangXin Memory, compared to DRAM. NAND has lower barriers than DRAM," explaining the characteristics of the NAND flash market.

In contrast, the NAND flash market has relatively lower technological entry barriers compared to DRAM, making it more likely for Chinese companies like Yangtze Memory (YMTC) to disrupt the market. This can lead to increased competition and price volatility in the NAND flash market.

NVIDIA has reported excellent earnings, surpassing market expectations in 9 out of its last 10 earnings announcements. However, interestingly, its stock price has repeatedly fallen immediately after earnings releases. This is because the stock price reacts more sensitively to market expectations, guidance, and specific corporate comments on AI investment, rather than just the earnings figures themselves.

Researcher Kim Jang-yeol emphasized, "When earnings are announced, almost 9 out of 10 times, they are good. But in 9 out of 10 times, the stock price dropped. You shouldn't immediately buy just because the guidance number is 5% better than earnings; you need to listen to the comments until the very end."

In other words, investors should not just look at earnings figures when predicting NVIDIA's stock price fluctuations, but comprehensively analyze the company's future earnings outlook (guidance) and management's specific comments on AI investment. This phenomenon is due to the market's very high expectations for future growth drivers, as NVIDIA is a leader in AI technology.

An assessment of two important market risks, fiscal risk and AI risk, was presented. For fiscal risk, a market decline was warned if a certain threshold (4.9% or 5.71%) was reached. Investors need to monitor these figures and prepare for market volatility.

Researcher Kim Jang-yeol explained, "For fiscal risk, set a threshold: if it reaches 4.9 or 5.71, assume the market will fall. For AI risk, that's not even 10%. I believe it's only 5%," assessing that AI risk has a much more limited impact compared to fiscal risk. In other words, AI-related concerns were seen as having a low market-wide impact, around 5%.

Despite pressure from the US government for domestic companies to invest in semiconductor plants in the US, the actual effects are expected to appear after 2030. Therefore, if investment decisions from 2027 to 2029 lead to short-term oversupply concerns and trigger stock price declines, such concerns are considered unfounded.

Researcher Kim Jang-yeol explained, "Since it's pressure from the US, if they do both, it will be a burden for us. But that burden isn't for 2027, 2028, or 2029. The actual effect will be after 2030," emphasizing the time lag in actual production effects.

Domestic materials, parts, and equipment (SooBujang) companies will need to plan investments and respond with this long-term perspective. It is crucial to closely monitor long-term industry trends and US policy changes rather than short-term market reactions.

Samsung SDS is set to play a pivotal role in robot orchestration (integrated control) for optimizing Samsung Group's manufacturing processes. This refers to software solutions that real-time assign and manage tasks for various robots, including humanoid robots, according to production plans.

Researcher Kim Jang-yeol explained, "Samsung SDS is doing robot orchestration, you know, the integrated control for humanoids. Who assigns robot tasks in real time, where and when robots are deployed according to production plans? Samsung SDS does it," detailing Samsung SDS's role.

Samsung SDS plans to maximize robot operational efficiency through integration with manufacturing execution systems (MES) and aims to expand its solutions to external companies like Toyota in the future. This demonstrates Samsung SDS's central role in robotics technology within the group and its securing of new growth engines.

Recently, Samsung Electronics' short-selling turnover surpassed KRW 1 trillion, drawing market attention. This occurred when the stock price fell by 9% the previous day, analyzed as a combined result of disappointment over shareholder return policies and the entry of some speculative forces.

Team Leader Hwang Yu-hyun stated, "Yesterday, it fell by 9%. Short-selling turnover has significantly increased, now at 1 trillion won," emphasizing the increase in short selling.

This increase in short selling suggests a spread of negative outlooks for Samsung Electronics or a large number of investors anticipating a short-term stock price decline. However, massive short selling can also lead to a subsequent short covering (buying shares to close short positions), serving as a catalyst for a stock price rebound.

Samsung Electronics' stock price showed a technical rebound ahead of its earnings announcement on Thursday. This was due to 'short covering,' where investors holding large short positions re-purchased shares to minimize losses or realize profits.

Team Leader Hwang Yu-hyun explained, "There's an earnings announcement on Thursday. So, how would short sellers feel? The stock price has already fallen a lot, and there's a floor below. So, the thinking was to escape, meaning it was a short-covering period."

Even amid foreign selling, institutional and bargain hunting buying contributed to defending the index. This helped prevent Samsung Electronics' stock price from falling below a certain level and created a situation where short sellers could not expect further declines.

Both Samsung Electronics and SK Hynix have secured downside rigidity, possessing factors that can defend against stock price declines. This is based on the inherent value of the companies and expectations for future earnings improvements.

Team Leader Hwang Hyun mentioned, "The issue with Samsung Electronics and Hynix now is the method of shareholder returns, whether it's short-term or long-term. While we currently applaud Hynix's method of shareholder returns... they are announcing something at the end of October, right? Something groundbreaking could come out then."

SK Hynix's shareholder return policy acted as a short-term positive, but questions about its sustainability have also been raised. In contrast, Samsung Electronics' shareholder return policy, to be announced at the end of October, is expected to be a key market variable, potentially positively impacting the stock price if it includes groundbreaking content.

The current balance of leveraged ETFs (Exchange Traded Funds) in the market, which remains in the KRW 6 trillion range, is a major factor in easing market volatility. It is expected that market volatility will decrease as this balance shrinks.

Team Leader Hwang Hyun explained, "As I mentioned last Friday, the balance for ETF leverage is still large... If this trend continues, it needs to drop to below 5 trillion, and ideally below 4 trillion, for ETF leverage to become a balance that reduces market volatility."

Market experts believe that market volatility will subside, and a stable trend will emerge when the leveraged ETF balance falls below KRW 4 trillion. This phenomenon occurs when investors reduce high-risk investments and optimism about the market decreases.

The recent strength in the cosmetics sector is being led by global ODM (Original Development Manufacturer) companies such as Kolmar Korea, Cosmecca Korea, and Cosmax. These companies are driving earnings growth by producing global hit products like Goodal Global's 'Joseon Beauty' and Tirtir.

Team Leader Hwang Hyun mentioned, "Kolmar Korea, Cosmecca Korea, Cosmax... what's common among them? They are ODMs... Goodal Global... you've heard of Tirtir, right? They are all subsidiary production companies underneath," emphasizing the role of ODM companies.

In particular, sun care products have become year-round essentials, leading to consistent demand growth. These factors combined are driving a rally across the entire cosmetics sector.

Samsung SDI announced the sale of its display-related stake this week. This stake sale is interpreted as part of a strategy to improve capital efficiency and invest the secured funds into future growth drivers.

Team Leader Hwang Yu-hyun stated, "Samsung SDI announced a stake sale this week. The money generated will be used to control the US solid-state battery plant. Shareholder returns can be done, and should be done." He suggested the proceeds could be used for investment in US solid-state battery plants or shareholder returns. This indicates Samsung SDI's move to strengthen its secondary battery business competitiveness and enhance shareholder value.

The semiconductor sector remains a core driver of the market, and large-cap stocks like Hynix and Samsung Electronics, while volatile, have strong rebound potential compared to the market. Team Leader Hwang Yu-hyun emphasized, "I think we should still hold 50% in large-cap semiconductors and SooBujang combined. Whenever there's an issue, there can be a concentration of funds, like last week."

It was suggested that maintaining a 50% weighting of large-cap semiconductors and materials, parts, and equipment (SooBujang) companies in the overall portfolio is important.

This is because whenever positive semiconductor-related issues arise, funds from the overall stock market can flow into the semiconductor sector. Therefore, a strategy of consistently maintaining investment weighting, based on belief in the long-term growth potential of the semiconductor industry, is necessary.

An analysis suggests that memory semiconductor companies have recently demonstrated better 'business performance' than AI-related companies like NVIDIA or TSMC, recording excellent operating profit margins. Researcher Lee Ji-hwan explained, "While memory semiconductors are surging ahead, NVIDIA's operating profit margin dropped to the low to mid-60s, and TSMC's to the mid-50s. So, if you focus on who is doing business well in terms of operating profit margin, memory semiconductors are currently the most prominent."

NVIDIA's operating profit margin was in the low 60s, and TSMC's was in the mid-50s. In contrast, memory semiconductor companies have shown rising gross profit margins, achieving relatively higher profitability.

This suggests that with the growth of the AI industry and the explosive increase in demand for memory semiconductors, memory semiconductor companies are gaining pricing power and improving margins. Therefore, investors need to pay attention to memory semiconductor companies that show superiority in terms of actual profitability, rather than solely focusing on the AI theme.

An analysis suggests that the recent decline in Samsung Electronics' stock price was not due to simple profit-taking but rather to selling linked to derivative products. In other words, the selling pressure was not intended to deliberately drive down the stock price.

Team Leader Lee Kwon-hee explained, "It's not selling pressure that's pulling the price down with some profit-taking. If we assume there's no intention to cause turmoil linked to derivative products, then I think this will wrap up this week, tomorrow or the day after."

This perspective anticipates that derivative-related adjustments will conclude within this week, and the stock price decline is unlikely to be interpreted as a long-term trend reversal signal. Therefore, investors should focus on Samsung Electronics' intrinsic value and future outlook rather than overreacting to short-term derivative-linked selling.

One important criterion for judging whether the overall market is in a major downturn is to compare the decline in the semiconductor sector with that of the KOSDAQ index. Team Leader Lee Kwon-hee explained, "If semiconductors fall significantly like last week or this week, but KOSDAQ rises, you can inversely think, 'Oh, this is a correction.' If semiconductors fall, but KOSDAQ falls even more sharply, then you need to be cautious."

If the semiconductor sector declines while the KOSDAQ index actually rises, it can be interpreted as an overall market correction. In other words, it is a correction in a specific sector, not an overall market decline.

However, if both the semiconductor sector and the KOSDAQ index show significant declines, it should be considered a major downtrend, requiring cautious 대응. This can be interpreted as a widespread signal of market stagnation.