The government announced the first investment destination of the Public Growth Fund, accelerating its KOSDAQ revitalization policy. But the domestic stock market this week (Dec. 22–26) is expected to face external risk factors, including volatility in the won-dollar exchange rate and concerns that artificial intelligence (AI) is overvalued.
The domestic stock market was a real roller coaster last week (the 15th–19th). The KOSPI, which opened at 4,167.16 points on the 15th, tumbled to 4,020.55 points on the 19th after extreme volatility, plunging 3.5% for the week. Over the same period, the KOSDAQ also fell 2.4%, remaining weak.
What poured cold water on the market was the reemergence of the "AI bubble" argument. Investor sentiment deteriorated sharply after news broke on the 17th (local time) that key financial partner Blue Owl Capital, which had been pushing a joint data center development with Oracle in the United States, had halted related investment talks. As doubts spread about the growth potential of the AI industry, related domestic stocks also weakened across the board, fueling the index's decline. SK hynix and Samsung Electronics fell 4.2% and 2.4%, respectively, last week.
However, this issue is not expected to significantly affect domestic corporations' fundamentals. Yoomyung-gan, a researcher at Mirae Asset Securities, said, "Domestic corporations' profit momentum remains solid," adding, "Samsung Electronics' operating profit for the fourth quarter of this year, to be announced early next year, is estimated at 15.7 trillion won, up 142% from a year earlier, and a large growth rate in profit is expected."
Beyond semiconductors, the profit change rates of IT hardware, energy, shipbuilding, machinery, holding companies, and hotel and leisure sectors were analyzed as positive.
In this week's stock market, government measures to revitalize the market, including the KOSDAQ revitalization policy, could act as a tailwind. On the 19th, the government selected seven destinations with large economic ripple effects as the first investments of the Public Growth Fund: ▲ nurturing K-Nvidia ▲ the National AI Computing Center ▲ offshore wind power in South Jeolla ▲ an all-solid-state battery materials plant in Ulsan ▲ a power semiconductor plant in North Chungcheong ▲ a foundry in Pyeongtaek ▲ energy infrastructure for the Yongin semiconductor cluster. The Public Growth Fund plans to support the venture industry with 30 trillion won annually over the next five years, with 40% or more going to regions.
Although the KOSDAQ revitalization policy was announced the same day, it drew criticism for lacking concrete investment plans. But as related government support begins in earnest, additional expectations could return.
Na Jeong-hwan, a researcher at NH Investment & Securities, said, "There is a possibility the government will provide tax benefits for the Public Growth Fund and KOSDAQ venture funds to create investment incentives, so related expectations will expand for the time being." NH Investment & Securities forecast the KOSPI to trade between 3,850 and 4,200 points this week.
It is also worth watching the United States' third-quarter gross domestic product (GDP) growth rate to be released on the 23rd. It is expected to show growth in the 3% range from the previous quarter.
A variable is the Bank of Japan (BOJ) implementing a 0.75 percentage point rate hike last week, lifting the policy rate to the highest level in 30 years since 1995. The main reasons are consumer price inflation above 2% in Japan and persistent high inflation due to a weak yen.
On this, Lee Kyung-min, a researcher at Daishin Securities Co., offered a positive assessment, saying, "The BOJ's rate decision will act to reduce uncertainty and raise expectations for a year-end Santa rally."
On the other hand, there is analysis that the won's weakness will persist because the yen did not appreciate as much as expected after the BOJ's announcement. Park Seok-hyun, an economist at Woori Bank, said, "Despite the BOJ's rate hike, expectations that Japan's economic growth will be constrained by high inflation and high interest rates are suppressing yen strength."
Park went on to say, "This lowers the risk of an 'yen carry trade' (borrowing yen at low interest rates to invest in countries or assets with relatively higher rates) unwind, but a continued weak yen will also pressure the won-dollar exchange rate." The won-dollar rate topped 1,480 won on the 17th for the first time in eight months, continuing its lofty run.