Is the period of sharp volatility ending? 'Market concerns' look at it this way

Summary

Shinhan Securities Dr. Kim Hyo-jin analyzes the severe KOSPI correction, historical parallels, and the drivers behind the selloff. She concludes the selloff is overdone and not driven by recession, a global AI bubble peak, or a domestic crisis, but warns that rapid recovery is unlikely due to psychological damage and heavy leveraged ETF trapped bids around 7,600 and 8,200-8,400. She maintains that memory/semiconductor stocks remain the most attractive sector given their superior earnings, while other sectors lack the strength to lead a rotation.

• KOSPI's 25-30% drop is extreme but not linked to recession, global AI bust, or an emerging-market crisis.
• Global economy is robust with strong export growth across most countries, ruling out an economic downturn trigger.
• Unlike the dot-com peak, global money has not rotated out of other markets into AI-only, so the AI rally is not in a blow-off phase.
• Short-term drag from US rate hikes is expected, but historical patterns show equities eventually recover after initial adjustment.
• Psychological damage and trapped leveraged ETF buyers near 7,600 and 8,200-8,400 likely cap KOSPI upside, leading to a sideways consolidation.
• Memory/semiconductor stocks remain the most attractive sector in Korea due to strong earnings and lack of momentum in autos, steel, and oil refining exports.
• Cosmetics and bio exports are positive but too small in weight to drive a market-wide rotation away from semiconductors.