Wall Street Journal Calls Korean Stock Market 'Craziest Market'

The Wall Street Journal described the Korean KOSPI market as 'The Craziest Market in the World.' This report highlighted that the Korean stock market shows extreme volatility, and investors are on a 'roller coaster of fear.'

Dr. Kim Dae-ho explained that the Wall Street Journal's assessment points to the excessively high volatility of the Korean stock market. This is interpreted as a warning of significant uncertainty in the investment environment.

Dr. Kim Dae-ho explained that excessively high market volatility creates enormous risks for both companies that need to raise funds and investors who manage them. He emphasized that the stock market is not simply a place to make quick money, and predictability is a crucial factor.

While companies can make long-term plans through stable fundraising, high volatility makes such plans difficult, and investors also find it hard to expect predictable returns.

Dr. Kim Dae-ho pointed out that government market policies, particularly issues with the National Pension Service's rebalancing and excessive leverage investment, are factors driving market volatility. He mentioned that if the National Pension Service had rebalanced at appropriate times, stock prices would have risen sufficiently, but instead, it either failed to rebalance or changed its targets opaquely.

He criticized that encouraging leverage investment when stock prices had already risen excessively further exacerbated market volatility.

Dr. Kim Dae-ho argued that the high volatility in the current Korean stock market should be interpreted as a warning about overheated leverage. He drew a line, stating that this volatility is not a sign that Korea's macroeconomic fundamentals are poor or that the value of Korean companies is unsound.

He emphasized that the global market's overall leverage overheating is affecting the Korean stock market and explained that it is unrelated to the intrinsic value of companies themselves.

Dr. Kim Dae-ho predicted that artificial intelligence (AI) will bring about the third revolutionary change in human history. He cited the first revolution as the change in worldview through the heliocentric theory and the second as the development of auxiliary means for physical labor through the Industrial Revolution. He emphasized that AI will serve as a tool to assist in the realm of human thought and spirit, following these two revolutions.

He explained that the advent of AI will not merely aid physical labor but will open a new paradigm that supports and expands human thought and judgment. This analysis suggests that it will have a profound impact on human life and social structures, similar to the past two revolutions.

Dr. Kim Dae-ho warned that the development of AI education technology could change the paradigm of the memory market. He suggested that as AI learns and improves efficiency, it may not require as much memory as before. If this change materializes, the memory market could shrink rapidly, posing a significant crisis for memory-centric companies like Samsung Electronics.

He also mentioned that the technology gap with rival China is rapidly narrowing, pointing out that Korean companies could lose out in market competition if they neglect innovative technology development. He warned that a lack of technological innovation could lead to a significant decline in the value of such companies in the financial market.

Dr. Kim Dae-ho recommended Exchange Traded Fund (ETF) investments over individual stock investments for general investors. He explained that to profit from individual stock investments, one must be very knowledgeable about the company's internal affairs, which is very difficult for ordinary investors. While individual stock investments can be rewarding for the effort put in, they require high levels of expertise and information.

He pointed out that for Korean companies, the conflict of interest between owners and shareholders makes individual stock investments even more difficult. He added that ETFs, which diversify investments across multiple stocks, can be a more rational alternative to disperse corporate risk and address information asymmetry.

Dr. Kim Dae-ho raised suspicions that Hyundai Motor's stock price could be artificially managed during its management succession process. He suggested that for a successor who needs to inherit management rights, a rise in stock prices increases the inheritance tax burden, so they might use 'tricks' to stabilize or even lower stock prices.

He mentioned that complex governance structures, such as Chairman Chung Eui-sun of Hyundai Motor Group's stake in Boston Dynamics, could be used for such stock price management. He also explained that there might be attempts to secure funds needed for management succession by raising the value of specific affiliates through spin-off listings, implying that existing shareholders' interests could be infringed upon in this process.

Dr. Kim Dae-ho predicted that the share of ETFs in the stock trading market would become overwhelmingly high in the future. He explained that ETFs are currently listed and traded like stocks, and the development of disclosure systems has significantly improved information accessibility.

Compared to past fund products, ETFs have the advantage of lower costs and higher trading convenience, making them a more attractive alternative for investors. He foresaw that ETFs, along with tokens, would form a crucial axis in shaping the future order of money.