Bloody Stock Market Crushed by Middle East and Oil Prices... 'Trump Taco' Signal to Emerge as Relief Pitcher | Hong Seon-ae, Song Jae-kyung, Dimension Investment Advisory CEOs [Yeouido Insight]

Summary

Song Jae-kyung, CEO of Dimension Investment Advisory, discusses the Korean stock market's sharp decline amid Middle East tensions and soaring oil prices. He expects Trump to soon signal de-escalation ('Taco') because surging gasoline prices and depleted strategic reserves threaten midterm election prospects. On semiconductors, he remains strongly bullish: AI-driven memory demand is intact, hyperscaler capex continues to rise, and China's K3 model will further boost memory consumption, favoring Samsung Electronics and SK hynix. He also highlights that leveraged single-stock ETFs are exacerbating KOSPI volatility, but the core AI investment cycle is not breaking.

• Oil and Middle East tensions hammer markets, but Trump likely to pivot toward negotiation ('Taco') to stabilize ahead of US midterms.
• US strategic petroleum reserves are critically low (43 days supply) and gasoline prices will soon breach prior highs, forcing de-escalation.
• Korean memory chip exports are surging, with export prices up 10x YoY, supported by AI data-center buildout.
• Alphabet increased its 2025 capex despite negative free cash flow, signaling that hyperscalers will keep investing aggressively in AI infrastructure.
• China's open-weight Kimi K3 model is a massive AI that will boost demand for high-bandwidth memory and GPUs, reinforcing the AI capex cycle.
• Leveraged single-stock ETFs on SK hynix are still attracting inflows, amplifying KOSPI volatility and complicating short-term positioning.
• Long-money institutions remain heavily allocated to semiconductors despite near-term anxiety; the AI investment super-cycle is not ending.
• Investors should adopt a patient, lower-leverage approach because the first half's rapid upward momentum will not be repeated.