Repeatedly Rising and Falling, Why? The Real Variables Moving the Market | Lee Seon-yeop, AFW Partners CEO

Summary

Lee Seon-yeop, CEO of AFW Partners, dissects the drivers of recent market volatility and the path forward. He identifies US interest rate stability as the linchpin for a sustained semiconductor rebound, explains why a controlled economic slowdown could actually benefit investment-driven tech stocks, and highlights dislocations in Korean equities including unfairly sold-off small caps, ignored memory shortages, and the potential for shareholder return surprises to unlock value.

• Extreme volatility persists due to diminished market strength and lingering uncertainty around US rates.
• Philips Semiconductor Index and US 10-year yield show near-perfect inverse correlation; rate stability is the single biggest catalyst for semis.
• High oil prices are slowing US consumption, which may force the Fed to pause instead of hiking, creating a tailwind for investment-driven sectors like tech.
• Memory chip supply is critically tight (NVIDIA cutting GPU memory, SK Hynix unable to meet demand) but the market is disbelieving the bullish signal.
• Korean shareholder return policies from semiconductor giants are a huge potential positive catalyst, though execution remains uncertain.
• The de-leveraging washout appears over; many KOSDAQ small caps were unfairly punished and are ripe for mean reversion.
• Long-only foreign funds are accumulating Korean stocks on dips, cushioning the KOSPI from purely algorithmic selling.
• The market is still in a process of normalizing from an abnormally volatile period, with stock-specific recovery themes emerging.