Will Market Cap #1 Change? Why the Market's Shift to AI Will Continue

Summary

Deputy General Manager Lee Hyuk-jin analyzes the historic battle for Korea's largest market cap between Samsung Electronics and SK hynix, arguing it reflects a structural AI capex cycle that will keep semiconductors dominant. He sees leveraged upside in related holding companies and equipment plays, warns that potential rate hikes will hurt auto and shipbuilding sectors, and expects oil to ease while Micron's low valuation offers a near-term catalyst.

• Samsung Electronics and SK hynix trade at very low multiples relative to US AI giants despite similar profit strength, creating significant catch-up potential.
• The AI capex cycle is projected to last through at least 2028, directly benefiting Korean semiconductor materials and equipment companies.
• Holding companies SK Square, SK Inc., Samsung C&T and Samsung Life offer higher potential alpha due to corporate actions and forced substitution by fund managers.
• KOSDAQ's relevance is fading as a new premium index based on operating profit will funnel institutional money into profitable large-caps and 소부장 names.
• Oil prices are expected to decline to $60-70 as the Iran risk premium abates and demand concerns take over.
• Micron's early-10s PER sets the stage for a positive surprise reaction, supporting the semiconductor sector in the very near term.
• Interest rate hikes in Korea will intensify the K-shaped market, leaving autos, shipbuilders and other rate-sensitive sectors vulnerable.