Value Investing: Market Trends & Sector Analysis

Okay, here's the English translation of the text, maintaining the original format and replacing "Next-Korea.com" with "nextgeninsight.net/":

Today's Market Trends and Key Issues

1. KOSPI and KOSDAQ Market Changes

KOSPI closed down by 0.8% and KOSDAQ also closed down by 0.06%.
The rise in the dollar-won exchange rate, and issues related to AI and semiconductors were the main triggers.

2. Semiconductor and AI Issues

SK Hynix: More than 9% decline due to DipSick-related issues. The emergence of high-efficiency AI models raised questions about the necessity of HBM (High Bandwidth Memory).
DipSick is a technology that significantly reduces GPU and power consumption, posing challenges for semiconductor companies.
Samsung Electronics: 2.4% decline due to HBM supply issues and decreased DRAM sales.

3. Rise in AI Software Sector

Share prices of software companies increased due to generative AI and the potential for cost efficiency. Naver rose by 6.13% and Kakao by 7.3%.
Increased investment interest in domestic and international companies related to AI-powered software.

4. Strong Performance of Robotics and Physical AI

As AI technology expands into the robotics market, robotics sectors such as Haizhen R (22.4%) and Rainbow Robotics (21.3%) showed strong gains.

5. Maintain Investment in Shipbuilding Industry

The shipbuilding industry maintained its upward trend without significant changes in fundamentals (e.g., HD Hyundai Heavy Industries up by 3.15%).
Demand for LNG carriers continues, with a positive outlook for the growth potential of shipbuilding companies.

Message to Investors

Shift Focus from Hardware → Software
The announcement of DipSick has highlighted the importance of AI software compared to hardware. There are mid-term investment opportunities in physical AI and data-driven software.
Importance of Hype Cycle Analysis
The current market is in a "decline-adjustment phase" related to semiconductors, and therefore, it is necessary to carefully approach software platforms and digital services with high growth potential rather than semiconductors.
Promising Sectors and Key Stocks

Software: Key domestic platform companies such as Naver and Kakao
Robotics: Rainbow Robotics, Robotis, etc.
Shipbuilding: Continuous growth expected due to expectations related to LNG carriers.

Key Events Next Week

U.S. Corporate Earnings Announcements
- Tuesday: Alphabet (Google)
- Thursday: Amazon
Major Domestic Corporate Earnings Announcements
- Shipbuilding: HD Hyundai Heavy Industries (Thu), Samsung Heavy Industries (Wed)
- Defense and IT: Korea Aerospace Industries, Hanwha Systems, Naver (Fri)

< Summary >

Today, the market closed with declines in KOSPI and KOSDAQ. The dollar-won exchange rate increased.
The semiconductor sector (SK Hynix, Samsung Electronics) declined due to the DipSick effect.
The software, robotics, and shipbuilding sectors showed gains based on expectations.
The importance of software and data-driven approaches is highlighted, and a mid-to-long-term investment strategy is needed.

[More…]

This has been summarized as above, please feel free to ask if you have any further questions!

*YouTube Source: [이효석아카데미]

– 1월 31일 나잇효 라이브

Economic Growth Rate, Economic Judgment, and the Link between the Real Economy and Asset Markets

Header 1: Trends in Global Economic Growth Rate

According to the latest economic forecasts from the IMF and the World Bank, the global economic growth rate is expected to be about 3.2% in 2024 and 3.3% in 2025, indicating a continued trend of low growth.
This is lower than the past growth rate of 3.7-3.8%, showing that the economy is in a state of entrenched low growth.
Key Points: Low growth means that the economy continues to grow, but not rapidly, indicating a state of 'inefficient growth.' The key is that growth is happening, but at a slower pace.

Header 2: Components of GDP and Economic Growth Rate

Economic growth rate is measured by the rate of increase in GDP. GDP consists of the following four components:
1. Consumption (C): Rate of increase in household consumption.
2. Investment (I): Capital investment and construction investment by companies.
3. Government Spending (G): New budget spending by the government.
4. Net Exports (NX): The difference between exports and imports.
For example, if South Korea's economic growth rate is 2%, it means that the economic size has increased by 2% compared to the previous year.

Header 3: Different Trends between the Real Economy and the Stock Market

Economic Growth vs. Stock Market: Economic growth (increase in size) is not directly linked to stock price increases or decreases.
The real economy focuses on 'size.' For instance, it is important whether consumption, investment, and government spending increase or decrease.
In contrast, the asset market focuses on 'prices' (e.g., stock prices, real estate prices).
There is no guarantee that stock prices or real estate prices will necessarily rise just because the economy is growing.

Header 4: The Link between Interest Rates and Asset Markets

There is an important link called 'interest rates' between the economy and the market.
1. Good Employment Indicators -> Expectations of Economic Growth: This leads to increased household consumption and corporate investment.
2. High Employment Rate -> Possibility of Interest Rate Hikes: Central banks consider raising interest rates to prevent the economy from overheating.
3. Interest Rate Hikes -> Stock Market Decline: Rising interest rates increase the attractiveness of savings and decrease the attractiveness of investments.
4. Promotion of Strong Dollar Phenomenon: High interest rates lead to a stronger dollar, causing capital outflows from emerging markets.
When interest rates rise, funds often flow out of foreign markets, such as the South Korean stock market.

Header 5: Economic Recession and Asset Prices

An economic crisis refers to a time when the GDP growth rate records a negative figure.
- Examples: The 1997 IMF financial crisis, the 2008 financial crisis, and the 2020 pandemic economic crisis.
However, economic recession (low growth) and the stagnation of the stock market and real estate market do not necessarily move in the same direction.
- Real Estate Prices May Rise: If the economic size increases, expansion of consumption and investment may lead to price increases in some asset classes.
- Interactions between Market Variables: Interest rates, exchange rates, and predictive psychology have a significant impact on asset prices.

Header 6: Correlation between Employment Indicators and Interest Rates

Increase in Employment -> Increased Possibility of Interest Rate Hikes:
- The stronger the employment indicators, the less likely the central bank is to lower interest rates to maintain price stability and prevent the economy from overheating.
- Rising interest rates can have a negative impact on stock prices.
Example: Increased employment raises interest rates on developed countries' government bonds and, conversely, can trigger capital outflows from emerging markets.
- This is linked to the strong dollar phenomenon.

Header 7: Basic Framework for Understanding the Economy

Economic judgment starts with understanding 'size.'
Asset market analysis focuses on 'price' fluctuations.
Understanding the link between these two markets will greatly help in gaining insights.
It is necessary to understand that global interest rates, exchange rates, and employment market indicators have chain effects on each other.

< Summary >

The global economy is expected to grow by 3.2-3.3% in 2024-25, maintaining a trend of low growth.

Economic judgment focuses on analyzing economic size (based on GDP), which is not directly linked to asset markets such as stock or real estate prices.

In particular, interest rates act as a key variable in market trends, and high interest rates lead to stock market declines, strong dollar phenomena, and capital movements.

Understanding the interconnected interaction between the economy and the market is important.

[More…]

*YouTube Source: [경제 읽어주는 남자(김광석TV)]

– 고용지표·금리가 자산·자본시장에 미치는 연결고리, ‘경기 판단’으로 투자 결정 하는 방법 | 클로즈업 – 경제 기초 강의 1편

Header 1: Trump's Foreign Policy and China Containment Strategy

Sub-item 1: America's Top Priority – Containment of China

The Trump administration has made containing China its top policy priority in the current era. This goes beyond simple economic containment to include pressure on maritime power and military dimensions.
US Forces Korea (USFK) are a strategic key card for the United States. In particular, by being stationed on the Korean Peninsula, which is very close to China, they exert a strong deterrent.
Trumpism adds a transaction-focused approach to the existing US foreign policy structure, emphasizing pragmatism and further pressuring China.

Sub-item 2: Indo-Pacific Strategy and ROK-US Relations

The Indo-Pacific strategy of the Trump era expanded upon Obama's "Pivot to Asia" policy, suppressing China in the international order.
The ROK-US alliance is used not only as a military alliance but also as a major framework for economic, technological, and security cooperation.
The United States views the ROK-US alliance as an important tool for containing China, as evidenced by US Congressional measures that restrict reductions in USFK.

Header 2: North Korean Nuclear Crisis and Trump's Approach

Sub-item 1: Deals with Kim Jong-un, Who Possesses Nuclear Weapons

Trump has expressed statements and policies that effectively acknowledge Kim Jong-un's nuclear possession, representing a step back from the CVID (Complete, Verifiable, and Irreversible Denuclearization) approach.
The US's "nuclear freeze" and "nuclear arms reduction" approach attempts to overcome the failure of the existing North Korean denuclearization strategy and achieve tangible results.
Like Trump's discussion of a "small deal" of dismantling the Yongbyon nuclear facility and lifting sanctions at the Hanoi summit, this is a strategy that seeks pragmatism beyond the existing big-deal approach.

Sub-item 2: South Korea's Options – Realistic Diplomacy

The Trump administration emphasizes a transaction-focused view of alliances, and South Korea should use this as an opportunity to maximize its own strategic interests.
There is a need to realistically consider and approach various options, including independent nuclear armament, deployment of tactical nuclear weapons, and acquisition of enrichment and reprocessing rights.

Header 3: The Future of Trumpism and Our Response

Sub-item 1: Increasing American Egoism

If Trump is re-elected, the United States will pursue a stronger "America First" policy and is likely to demand even greater burdens from allied nations.
Alliances are also transactions, and South Korea has positioned itself as a key partner in containing China amid the US-China competition under Trumpism.

Sub-item 2: Utilizing Trump's "Transaction-Focused Diplomacy"

In negotiations with the United States, South Korea needs to pursue pragmatic diplomacy based on a clear strategy and initiative, giving where necessary and taking where needed.
In particular, by utilizing the internal US checks and balances (powers of Congress and the states), a way can be sought to reduce uncertainty and strengthen the ROK-US alliance.

< Summary >

Trump prioritizes containing China and is exercising a strong deterrent through the Indo-Pacific strategy. USFK is a key element of this strategy.
Trump effectively acknowledges Kim Jong-un's nuclear possession and considers a freeze and reduction approach. The ROK-US alliance is undergoing a change towards a transaction-focused relationship, making the pursuit of pragmatism important.
South Korea must independently secure key technological rights and seek to maximize practical benefits by leveraging the transaction-focused diplomacy of Trumpism.