Semiconductors are strong, but don't let your guard down…What's the real variable? | Mok Dae-gyun, CEO of KGCI Asset Management [Double Up]

Summary

Mok Dae-gyun, CEO of KGCI Asset Management, analyzes Korean market volatility and the AI-powered semiconductor rally. He argues that Samsung Electronics and SK Hynix remain the core leaders, driven by the AI supercycle, earnings upgrades, and SK Hynix's upcoming ADR listing. He also identifies US pharmaceutical stocks as a defensive rotation play to manage semiconductor swings and discusses how the interest-rate outlook will dictate whether semis or defensives outperform.

• Korean equity volatility stems from high retail leverage, leveraged ETF unwinding, and mechanical rebalancing by foreign passive funds.
• AI semiconductor supercycle supported by HBM demand, long-term supply agreements, and strong Micron earnings points to continued earnings upgrades for Samsung and SK Hynix.
• SK Hynix ADR listing on Nasdaq is expected to reduce the Korea discount, raise global investor awareness, and lift valuations for both SK Hynix and Samsung.
• Portfolio managers rotate between overextended semis and undervalued defensive sectors; US pharmaceutical stocks have been bought as a buffer against semiconductor volatility.
• If the Federal Reserve holds rates steady, it supports maintaining aggressive positions in semiconductor leaders; if rates rise, defensive sectors like pharma become more attractive.
• KOSPI advances toward 12,500 are possible with earnings momentum, but a full re-rating requires stable foreign flows and won stability, which remain uncertain.