Trump's Move, Is the Fed Changing? February Investment Strategy Review | Hong Sun-ae, Lee Eun-taek, KB Securities Asset Allocation Strategy Director

Summary

Lee Eun-taek, Director of Asset Allocation Strategy at KB Securities, discusses why Korean equities are overheated after a sharp January rally and why chasing strength is unattractive. He argues that corrections require a tightening trigger, and that monetary policy, especially the Fed under Kevin Warsh, will dominate market direction. He remains constructive on the AI/semiconductor cycle after corrections but sees long-term AI valuation and QE-backstop risks, and highlights high-beta 'soft AI' sectors such as quantum computing, SMRs, space, and next-generation energy as highly policy-sensitive.

• Korean equities show overheat signals: high 50-day moving-average deviation, retail buying at index milestones, and a Korea gold premium.
• Overheat alone is not a sell signal; a tightening trigger is needed for a durable correction.
• Bull-market corrections often occur twice a year, around March-April and October-November; buy zones are the 50-day and 100-day moving averages.
• Kevin Warsh's policy framework is ambiguous, but his stated aim is lower rates, AI-led productivity, and a strong dollar without QE.
• The speaker expects AI and semiconductor investment cycles to continue, making corrections attractive if fundamentals remain intact.
• AI valuations cannot rise forever; bubble-burst conditions are tightening plus a slowdown in year-over-year earnings growth.
• High-beta 'soft AI' areas such as quantum computing, SMRs, space/rockets, and next-generation energy are highly sensitive to monetary policy.
• Long-term risk: if the Fed under Warsh avoids QE, the next crisis may lack a lender-of-last-resort backstop.