It was a day of fear in the market. The KOSPI index, which dropped nearly 7% during trading, barely managed to hold above the 6,000 mark, leaving retail investors disheartened as stock prices fell sharply. Two-thirds of KOSPI-listed stocks declined, and the market capitalization fell below 5,000 trillion won. Securities experts have differing views on when and how much the market might rebound. Some analysts suggest that the market is overreacting to concerns about overinvestment in artificial intelligence (AI), while others express skepticism about the KOSPI's recovery, particularly centered around Samsung Electronics and SK Hynix.
"Excessive Decline" vs "Real Concerns in Semiconductors"
In an urgent assessment conducted on the 13th, six market experts provided varied opinions on the current state of the domestic stock market. Some believe the market is overreacting to negative news related to AI and semiconductors, while others are increasingly doubtful about the long-term growth potential of the semiconductor industry.
Park Yeon-joo, head of the AI Research Center at Mirae Asset Securities, stated that the KOSPI is overreacting to fears of overinvestment in AI. She noted, "The earnings in the semiconductor sector are solid, and valuations are already low. The decline in stock prices due to deteriorating investor sentiment and concerns over AI overinvestment is excessive."
Conversely, Kim Dong-won, head of research at KB Securities, pointed out that skepticism about the semiconductor industry is growing. He remarked, "While profit estimates for memory semiconductors continue to rise, uncertainty about future earnings is causing stock prices to decline. Although the semiconductor cycle has not ended, it is difficult to completely dismiss doubts about it being a cyclical industry."
Concerns about increased supply and price competition were also heightened by news of China's Changxin Memory Technologies (CXMT) planning to release server-grade DDR5 chips by the end of the year. Kim Hak-kyun, head of research at Shin Young Securities, explained, "The market reacted to CXMT's announcement of achieving results in advanced processes by the end of the year. Regardless of CXMT's success, the market is showing a tendency to avoid uncertainty."
Lee Jin-woo, head of research at Meritz Securities, commented, "The sharp decline was not due to a new negative factor but rather a significant sell-off from accumulated disappointments. The KOSPI is heavily weighted in semiconductors, making it susceptible to large fluctuations." Yang Ji-hwan, head of research at Daishin Securities, also noted, "The rise in government bond yields and disappointment in OpenAI coincided with the CXMT news, contributing to the market's reaction."
"Short-Term Correction Followed by Rebound" vs "Range-Bound Until Early Next Year"
Forecasts regarding the future direction of stock prices are also divided. Some analysts predict that the market will remain range-bound through the fourth quarter of this year and into the first quarter of next year, while others see potential for a rebound after a short-term correction. Opinions vary on whether market conditions will improve after the second quarter of next year.
Lee Jin-woo stated, "There are no new negative factors affecting the fundamentals, so I believe the market will gradually stabilize. There is little evidence to suggest that the semiconductor cycle has turned. In a high-interest-rate environment, doubts about the industry worsening are growing, but ultimately, it must be proven through actual results." He emphasized that whether Samsung Electronics can meet market expectations for next year's outlook will significantly impact future stock prices.
Park Yeon-joo also mentioned, "While there are concerns about the sustainability of AI investments due to their scale, AI represents a productivity revolution on the level of an industrial revolution, making investments valid. Domestic semiconductor companies have high potential to strengthen their global competitiveness based on substantial cash flow over the next 3-4 years."
On the other hand, Shin Jung-ho, head of research at LS Securities, believes that the phase of stock price increases led by semiconductors is nearing its end. He stated, "The market is already aware that conditions will improve next year and has reflected this in stock prices. There is a prevailing perception that margins and profit momentum are at their peak." He added, "For the KOSPI to escape the range, projections must indicate a level of profit growth that is significantly different from before, which is unlikely to be achieved solely based on Samsung Electronics' outlook for next year."
Shin predicts that the KOSPI will likely remain range-bound until the second quarter of next year, stating, "The KOSPI will hover between 6,000 and 7,000, and reaching 7,000 would require about a 20% increase from the current index, which is not an easy situation." Yang Ji-hwan also noted, "In the fourth quarter of this year, I expect the market to show a range-bound trend rather than a significant decline, with the lower end around the mid-5,000s. While there is currently a lack of momentum for a rebound, the overall macroeconomic uncertainties may ease after the first quarter of next year, improving market conditions."
* This article has been translated by AI.
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