An unprecedented rally comes after an unprecedented correction! The law of leading stocks proven by history | Myeong Min-jun, Kang A-rang, Lee Ji-hwan

Summary

Lee Ji-hwan, CEO of Aurora Investment Advisory, explains the extreme volatility in the Korean stock market as a historical level-up phase driven solely by AI momentum, not broad economic recovery. He draws parallels to the 2004-2007 period when smokestack stocks led a similar structural break, arguing that current leaders Samsung Electronics and SK Hynix may still have a final sharp rally ahead after a brief correction. He advises holding the leaders through the turbulence and warns against rotating into other sectors, while also noting that KOSPI is likely to maintain a higher support level around 3,000.

• The market rally is being driven entirely by AI momentum, not by a synchronized economic cycle, causing persistent fear and volatility.
• The period resembles the 2004-2007 level-up, where a specific sector (then smokestack, now AI semiconductors) led the market higher.
• Leading stocks Samsung Electronics and SK Hynix could follow a historical pattern of a 20-30% correction before a final explosive rally.
• The AI memory cycle, fueled by NVIDIA's upcoming Vera Rubin and Vera Ultra chips, supports demand into year-end or early next year.
• KOSPI's break above 3,000 is seen as a structural breakout, with the old resistance now acting as new support.
• Rotating into consumer cyclicals or other sectors is warned against if one believes the AI leaders have peaked; historically, even laggards fell significantly.
• If economic conditions improve, consumer cyclicals could eventually emerge as new leaders, but that scenario is secondary.