Unexpected Background Behind KOSPI's Surge... Markets Buzz With 'End of Vicious Cycle'

[Anchor]

Behind today's historical surge lies a newly established U.S. hedge fund. Although it experienced rapid growth by heavily investing in AI-related companies, it recently suffered massive losses due to the plunge in tech stocks. Consequently, the fund had been continuously liquidating its holdings to cover those losses, but this vicious cycle of selling has now been resolved.

Min Gyeongho has the details.

[Reporter]

The turning point came largely from optimistic forecasts regarding semiconductor demand.

Microsoft and Amazon sequentially reported cloud business revenues that exceeded expectations, easing doubts about semiconductor demand.

The news that a fund managed by Leopold Aschenbrenner, a former OpenAI researcher dubbed a genius investor, had been sold to another hedge fund served as a favorable tailwind for supply and demand.

The fund was an aggressive one utilizing fourfold leverage, centered on semiconductor stocks such as SK Hynix listed in the U.S. However, as semiconductor stock prices plummeted this month, it began suffering significant losses to its capital.

As the size of the capital shrank, the relative scale of debt grew. To adjust this ratio, the fund was forced to sell the stocks it held, and this volume created a vicious cycle that triggered further declines.

Amid this situation, the sale of the fund led to interpretations that large-scale selling pressure could subside, causing U.S. semiconductor stocks to skyrocket overnight.

[Han Ji-young / Deputy Manager, Investment Strategy Team, Kiwoom Securities: Pressures such as forced liquidation and margin calls will ease, and it will serve as a signal for the end of the 'deleverage' that dragged stock prices downward....]

Our semiconductor stocks, which had been excessively undervalued compared to U.S. semiconductor stocks like Micron, bounced back even more strongly like a spring.

[Shin Seung-jin / Head of Investment Information Team, Samsung Securities: Even with today's rise, the KOSPI valuation remains in a significantly undervalued range compared to the global stock market. I believe the possibility of an additional rebound is high right now.]

However, voices are also emerging urging caution against excessive optimism, as major price-volatility catalysts remain, including the earnings announcements of U.S. semiconductor companies like AMD and Nvidia, as well as surveys on next year's DRAM demand.

Additionally, experts warn that the market trends over the past month have shown that excessive debt-financed investing can lead to unexpected, heavy losses.

(Photo courtesy of Kim Hyun-sang | Video by Kim Jong-tae)
※ Please note: This article was translated by AI and may contain errors.