[Anchor]
Let's take a closer look at the background and outlook behind the extreme volatility in the stock market with Editorial Writer Park Jin-ho.
Q. Record-Breaking Rebound Following the Plunge… What is the Background?
[Park Jin-ho / Editorial Writer: As reporter Min Kyung-ho well reported earlier, the biggest factor was the resolution of the massive stock sell-off crisis by U.S. hedge funds. This served as a catalyst for foreign net sellers, who had been selling for four consecutive days, to turn into buyers. Looking at the bigger picture, the background included Samsung Electronics' conference call yesterday (the 30th) and the earnings release by U.S. big tech Amazon early this morning. In particular, Samsung Executive Vice President Kim Jae-jun clearly pointed out that 70% of DRAM semiconductor volume has been contracted for the long term of five years or more, and that supply will remain tight in 2028, the year after next. This had a significant effect of dispelling recent controversies over a semiconductor peak. In addition, Amazon's earnings, which had been evaluated as falling behind the most in the AI race, came in much better than expected. In particular, it recorded its strongest revenue growth in cloud service in four and a half years, and CEO Andy Jassy's clear declaration that capital expenditures on data centers—which the market is most concerned about—will start generating profits in two years proved effective. Consequently, this provided an answer to the persistent anxiety over the AI industry bubble, which questions when and how much profit will actually be generated if facility investments continue.]
Q. What are the Problems with Single-Stock Leverage ETFs?
[Park Jin-ho / Editorial Writer: Although public sentiment is already unfavorable, another problem was that 16 highly speculative products were launched all at once, in a situation where the KOSPI market capitalization is heavily concentrated—about half—in just two semiconductor companies. As negative news emerged, the decline deepened, and retail investors who bought these products rushed into panic selling. This led to a plunge in the underlying stock prices and consecutive days of blows to the index as a whole. An even bigger problem here is that the market has become extremely favorable to what is called ultra-short-term trading by foreigners, known as 'HFT,' which financial markets are currently paying attention to. Since this method utilizes computer algorithms to execute massive trades in microseconds—faster than a second—there are strong suspicions that they are rapidly driving up prices, dumping shares when retail investors flock in, and repeating this process in a short period to pocket arbitrage gains. Therefore, criticisms are inevitable that preparations, such as preliminary simulations, were lacking even if defending the exchange rate was the original purpose.]
Q. What is the Direction for Retail Investors' Response?
[Park Jin-ho / Editorial Writer: As everyone knows, the KOSPI remains undervalued. It is similar to the COVID-19 pandemic period six years ago. While there is plenty of room for an upward trend, anxiety remains the issue. Since many investors bought around today's index level of about 6,500, or a Samsung Electronics stock price of about 250,000 won, there is a possibility that so-called 'principal-defense selling' volume will emerge. Thus, forecasts suggest it may take a bit more time to reverse into an upward trend. Another concern is that the National Pension Service failed to sufficiently reduce its domestic stock weighting during the high stock price period in May and June, leaving it with insufficient purchasing power to support the market in the current situation. Furthermore, concerns are being raised that the government's leverage ETF measures have limited practical effectiveness since foreign investors are not targeted, highlighting the need to carefully consider countermeasures against the market-disturbing activities mentioned earlier.]
(Video Editing: Kim Yun-sung, Design: Cho Soo-in)
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