Debate over inflated valuations for artificial intelligence (AI) and expectations for U.S. interest rate cuts are shaking global stock markets. This week (Nov. 17–21) is expected to be an inflection point to see how these two factors will affect stocks ahead.
First, before dawn on the 20th Korea time, Nvidia is scheduled to report earnings. As bubble claims that AI-related stocks are overvalued have flared up, U.S. tech stocks have also pulled back. Nvidia's share price has likewise corrected about 15% from its peak.
At such a moment, Nvidia's results and the stance of Jensen Huang, Nvidia's chief executive officer (CEO), appear likely to be an inflection point that sets the market's direction. Citibank projected Nvidia's revenue for the latest quarter at $56.8 billion (about 83 trillion won), topping the market consensus of $54.6 billion (about 80 trillion won).
Na Jeong-hwan of NH Investment & Securities said, "The market's focus is expected to be on margin improvement and the sales growth rate rather than the earnings surprise itself," adding, "What CEO Huang says about the data center revenue outlook or the AI bubble debate will also be an important variable for the share price."
On the same day, attention should also be paid to the release of the minutes from the U.S. Federal Open Market Committee (FOMC) for October. With the Federal Reserve's policy meeting set for December, uncertainty over rate cuts is gradually increasing.
There is talk that widening divisions within the Fed have clouded the direction of monetary policy. Fed Chair Jerome Powell recently said, "A December rate cut is not a done deal." Fed members are also publicly continuing remarks that the benchmark rate should be held at its current level.
In particular, with a U.S. government shutdown (temporary work stoppage) expected to cause missing releases of U.S. economic indicators, confirming the views of Fed members is likely to become more important.
Jeong Hae-chang of Daishin Securities Co. said, "Through the minutes, we will be able to check whether there are internal differences of opinion and the extent of the gap," adding, "With a shutdown expected to cause missing releases of October economic indicators, policy decisions may be made without key data, making the thoughts and judgments of Fed members even more important."
Attention should also be paid to policy momentum led by the National Assembly. As discussions on the tax reform plan are gaining traction, the ruling party is expected to introduce the third amendment to the Commercial Act this week at the KOSPI 5000 Special Committee level. The amendment is expected to require the cancellation within one year of treasury shares already held.
In the domestic market, expectations for policy benefits are likely to grow, centered on financial stocks and holding companies with large amounts of treasury shares. Also, with the top rate for separate taxation of dividend income tentatively set at 25% and the year-end dividend season approaching, attention is expected to converge on dividend stocks.
On the 18th, The Pinkfong Company, an early-childhood content company, is scheduled to list on the KOSDAQ market. In the public offering subscription for retail investors, The Pinkfong Company recorded a competition rate of 846.9 to 1. The final offer price was set at 38,000 won, the top end of the indicative range.
Meanwhile, last week the KOSPI, which had rebounded, gave back gains by the close. On the 11th, the KOSPI returned to the 4,100 level for the first time in five sessions and extended gains for three sessions. But on the 14th alone, it fell 3.81% (159.06 points) to close at 4,011.57.
The impact was significant from the rekindled debate over inflated AI valuations in the U.S. market. Large-cap semiconductor stocks that have led the market, such as Samsung Electronics and SK hynix, took a direct hit.