The Truth About Sector Rotation Revealed…Ultimately It Rotates Within AI

Summary

Han Sang-hee of Hanwha Investment & Securities discusses global market polarization driven by AI and semiconductors. He argues the AI cycle will be long, rotation will stay within AI, and memory stocks like Samsung Electronics and SK Hynix remain strong. He advises trimming semiconductor holdings if the S&P 500 reaches 8,000 due to valuation and mid-term election risks. He also suggests expanding the AI theme to biotech and aerospace.

• Global markets are extremely polarized, with only AI and semiconductor stocks rallying meaningfully.
• The AI-driven memory semiconductor cycle is prolonged and less volatile, sustaining Samsung Electronics and SK Hynix.
• Sector rotation will remain inside the AI theme; investors should avoid rotating into non-AI sectors.
• If the S&P 500 reaches 8,000, valuation becomes stretched and political uncertainty may trigger a short-term correction.
• Investors should trim semiconductor holdings by about 30% when the S&P 500 crosses 8,000.
• Rising interest rates reflect strong economic growth, not a hawkish Fed; this is not a headwind for stocks.
• Biotech and aerospace can be considered AI expansion plays, though conviction in Korean names is lower.