Kim Jung-hyun, head of the ETF business group at Shinhan Asset Management, predicts that the leadership of artificial intelligence (AI) semiconductors in the stock market will continue in the second half of the year. However, he advises that due to expected increased volatility, investors should consider balanced investments using income-generating assets such as high-dividend and financial stocks.
In an interview with Aju Economy on July 22, Kim stated, "The leadership of semiconductors will persist in the second half, and it is necessary to maintain a certain level of investment in semiconductors while balancing the portfolio."
Regarding the recent concerns about a peak in semiconductor stocks, he assessed that the issue is more about the pace of growth rather than the direction. Kim explained, "The current debate is ultimately about the slope of growth, questioning whether the anticipated growth rate is slightly declining, but it is difficult to deny the upward trend itself."
He also believes that the changes brought by AI will extend beyond semiconductors. "AI cannot be viewed as just one theme," he said, forecasting that the world will continue to change through AI for at least the next 5 to 10 years. He noted that the transformation is spreading from semiconductors to infrastructure, power, software, and more, anticipating further investment opportunities in various fields.
Kim expects that market volatility in the second half of the year will be greater than in the first half. He cited the adjustment of market expectations regarding the growth rate and fair value of semiconductors as a reason for potential fluctuations in stock prices.
He specifically warned about the excessive concentration of investment funds in semiconductors. "Excessive concentration always leads to side effects," he emphasized, adding, "While I cannot control market concentration, I can manage the focus of my portfolio."
For the second half of the investment strategy, he suggested maintaining a certain level of semiconductor exposure while also including income-generating assets like high-dividend stocks and financial holdings. He explained that utilizing assets expected to benefit from dividends and shareholder returns can enhance the defensive strength of the portfolio.
In line with this strategy, Shinhan Asset Management is preparing products that focus on both growth themes and income-generating assets. The firm plans to introduce defensive income ETFs that can be utilized by retirement pension investors while also discovering growth themes related to AI.
Kim stated, "It is important to make efforts to reduce the volatility of my portfolio under high volatility, and our goal is to quickly provide products that investors can utilize."
Kim also anticipates continued growth in the domestic exchange-traded fund (ETF) market. This growth is attributed to the expansion of non-face-to-face investment platforms and the increase in self-directed investors managing their retirement pensions and individual retirement accounts (IRAs).
He noted, "Among existing financial investment products, ETFs are the most efficient means," highlighting their low costs, ease of trading, and the variety of products available.
Since launching the SOL ETF in 2021, Shinhan Asset Management has focused on discovering differentiated products. Following the introduction of Korea's first monthly dividend ETF in 2022, the firm has continued to roll out ETFs that differentiate themselves from existing products in sectors such as semiconductors, secondary batteries, and shipbuilding.
Kim remarked, "SOL was initiated with the belief that we should provide solutions to investors, and it is important to continuously introduce products that are not available in the market to create a unique identity for SOL."
He identified product differentiation as a key challenge for the domestic ETF market to achieve further growth. He pointed out that competition among asset management firms has become heated relative to the market size, leading to the repeated launch of similar products imitating popular offerings and a race to lower fees.
Kim stated, "When someone creates a creative and innovative product, similar products emerge immediately, leading to a fee competition that is prevalent. It is crucial to establish a differentiated competitive edge unique to Korea rather than merely following the quantitative scale of the U.S. ETF market."
* This article has been translated by AI.
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