The Reason It Can't Rise Even If It's Cheap...The Identity of 91 Trillion Won Piled Up on KOSPI | Vincent, Hana Securities Analyst
The Reason It Can't Rise Even If It's Cheap...The Identity of 91 Trillion Won Piled Up on KOSPI | Vincent, Hana Securities Analyst [Vincent's Checkpoint]
Speakers
Vincent
— Hana Securities Analyst
Summary
Vincent, a Hana Securities analyst, argues that KOSPI is in a value trap despite cheap valuations because about 91.6 trillion won of overhead supply caps rallies, with Samsung Electronics and SK Hynix stuck despite buybacks. He expects a difficult, seasonally weak September for US and Korean equities, with key events including the September FOMC, a US-China summit, and US midterm elections. He remains structurally bullish on Korean semiconductor leaders as US-China conflict slows Chinese catch-up, but warns that Texas data-center politics and oil-driven geopolitical risks could prolong the correction. Near-term he favors accepting a period adjustment while maintaining a long-term uptrend view led by semis.
- KOSPI rebounded 29% from August lows but faces 91.6 trillion won overhead supply; Vincent sees a value trap and period adjustment.
- Samsung Electronics and SK Hynix are cheap below 4x book, but buybacks are the only visible demand; escape requires fresh catalysts.
- September seasonality looks weak for S&P 500 and Korea, reinforced by midterm election, Fed chair change, and rate-hiking cycle.
- FOMC focus should be on Fed economic projections and AI productivity rather than just a rate freeze or conditional hike.
- US-China summit and chip war create structural opportunity for Korean semiconductor leaders but also event risk.
- Texas data-center permit delays and war/oil escalation are potential risks to AI chip demand and equity momentum.
Ideas
Cheap KOSPI trapped by massive overhead supply.
KOSPI is cheap at about 5x valuation, but Vincent argues the index is in a value trap because roughly 91.6 trillion won of overhead supply sits above the market; every rally attempt is sold into, so expect a prolonged period adjustment rather than an immediate breakout.
Samsung and SK Hynix remain value trapped.
Samsung Electronics and SK Hynix trade below 4x book, but despite record buyback and dividend announcements, buybacks are the only visible buyer, volume has shrunk, and the two biggest Korean shares remain stuck under heavy supply; absent a fresh catalyst they likely spend September and Q4 in a value trap.
S&P 500 faces weak September seasonality.
US equities face a seasonally weak September: the S&P 500 has historically been weakest in September, and this year stacks midterm-election years, Fed-chair replacement years, and rate-hiking regimes, all of which also showed weak Septembers.
AI productivity could revive US tech stocks.
Vincent thinks the more important FOMC signal is whether AI is lifting US productivity enough to offset high rates; if the Fed's projections confirm AI as a new production factor, US technology stocks could regain stronger momentum.
Texas data-center politics threaten AI chip demand.
Texas is set to become the largest US data-center hub, but its Republican governor is slowing fast-track approvals on inflation concerns, which Vincent flags as a risk that data-center construction delays could turn into a red flag for NVIDIA and less smooth memory demand.
Geopolitics keeps oil a key market trigger.
War escalation and Hormuz/Venezuela supply risks could keep oil elevated; that would force the Fed to stay hawkish and likely hurt midterm election prospects, while any de-escalation could produce a sharp relief rally.
