NH Investment & Securities stated on the 14th that KOSPI's recent decline has priced in negative factors, with rebounds possible within 2-3 trading days. Analyst Kim Byung-yeon attributed the rapid price adjustment to semiconductor peak-out debates, renewed US-Iran tensions, domestic supply-demand disruptions, and US interest rate rise fears. The KOSPI has fallen over 30% from its peak while the KOSPI 200 volatility index (VKOSPI) surged to 96.9, surpassing the 89.3 peak recorded during the 2008 global financial crisis. Kim stated that once uncertainties ease, the Korean stock market will rebound, noting that extreme market fear levels limit further downside pricing of negative factors.
KOSPI Volatility Index Exceeds 2008 Financial Crisis Peak
The VKOSPI recently climbed to 96.9, exceeding the 89.3 high point during the global financial crisis. This represents approximately four times the long-term average of 21.6. Kim stated, "Now is the time to recall the experience of rapid rebounds after the sharp declines in March-April," adding that "even if additional sudden drops appear, this is an area where rebounds can occur within 2-3 days." He projected that subsequent market movements will involve reassessing industry direction while confirming big tech earnings results and whether AI investment continues.
NH Investment Forecasts 51% Increase in Hyperscaler Capital Expenditure
NH Investment & Securities projects that capital expenditure (CAPEX) by five hyperscalers—Microsoft, Meta, Alphabet, Amazon, and Oracle—will reach $758 billion in the current year, representing a 51.1% year-over-year increase. The firm forecasts these companies' EBITDA (earnings before interest, taxes, depreciation, and amortization) will grow 29.4% during the same period, indicating sufficient financial capacity to sustain large-scale investments. Kim assessed that concerns about semiconductor peak-out are premature, noting that while short-term earnings forecasts for SK Hynix may decline due to long-term supply agreement (LTA) pricing, the likelihood of big tech reducing AI investment remains low and industry growth direction remains clear.
The report noted that improved token usage efficiency in AI models should not be directly linked to reduced semiconductor demand. The analysis indicates that as some computing operations distribute to central processing units (CPUs) and external devices, the importance of not only high-bandwidth memory but also general memory, data centers, and network infrastructure may increase together.
Foreign Ownership of Korean Semiconductor Stocks Reaches Historic Lows
Foreign investors' ownership stakes in Korean semiconductor stocks have declined to historic low points, suggesting that additional selling pressure may gradually decrease. NH Investment assessed that supply-demand burdens will progressively ease, with investor deposits still maintaining levels above 100 trillion won. The firm judged that credit transaction margin balances remain low relative to market capitalization, limiting the risk of large-scale forced selling similar to past episodes.
SK Hynix ADR Premium and Index Inclusion Potential
As of the 10th, SK Hynix American Depositary Receipts (ADR) traded at approximately 16% premium over domestic shares. NH Investment stated that due to structural difficulties in conducting active arbitrage trading in the short term, a certain level of premium can be maintained, and if the ADR gains inclusion in major semiconductor indices in the future, additional capital inflows can be expected. The firm cited SK Hynix's US ADR listing as a factor for stock revaluation.
Geopolitical and Monetary Policy Factors Show Limited Additional Impact
Kim stated, "Both the US and Iran find it difficult to sustain a long-term blockade of the Strait of Hormuz, so limited conflicts and long-term negotiations are likely to proceed in parallel." He added, "As expected inflation and wage increase pressures in the US have stabilized, the Federal Reserve is expected to maintain the base rate freeze for the time being, so the intensity of variables that could further shake the market will gradually weaken."
FAQ
What did NH Investment & Securities report about KOSPI stocks on the 14th?
NH Investment & Securities stated on the 14th that negative factors affecting KOSPI have already been priced in through rapid adjustment, with analyst Kim Byung-yeon projecting that rebounds could occur within 2-3 trading days even if additional drops appear. The report noted that the VKOSPI reached 96.9, exceeding the 2008 financial crisis peak of 89.3.
How much do hyperscalers plan to invest in capital expenditure according to NH Investment?
NH Investment & Securities forecasts that five hyperscalers—Microsoft, Meta, Alphabet, Amazon, and Oracle—will spend $758 billion on capital expenditure in the current year, representing a 51.1% year-over-year increase. The firm projects these companies' EBITDA will grow 29.4% during the same period, indicating sufficient financial capacity for large-scale AI investments.
Why does NH Investment assess that semiconductor peak-out concerns are premature?
Kim Byung-yeon stated that while SK Hynix's short-term earnings forecasts may decline due to long-term supply agreement pricing, the likelihood of big tech companies reducing AI investment remains low and the industry growth direction remains clear. The report noted that improved AI model efficiency should not be directly linked to reduced semiconductor demand, as computing distribution increases the importance of various infrastructure components including general memory, data centers, and network systems.
