[Market Man's Loading Briefing] October 19, AI, fall, French variables increase

Selling of AI-related stocks continues... Due to the weakness of Coreweave and semiconductors, domestic related indicators also fell, KOSPI -14.5% last week... Volatility section added to French financial instability

Key market trends

• ① AI stocks continue to weaken… Coreweave plunges again

The U.S. stock market was weak, centered on technology stocks, with AI-related stocks, including Coreweave, falling sharply again.

The prospect that Antropic's estimated corporate value could fall from $2 trillion to $1.5 trillion is putting pressure on investment sentiment.

Reports that a New York pension fund requested the suspension of Antropic's IPO due to AI safety and governance issues are also burdensome.

As some in the market discussed the possibility of large hedge funds liquidating their positions, the decline in related stocks such as Ballum Energy, Nevius, Coreweave, and Micron increased.

Wall Street continues to evaluate that the recent decline in AI-related stocks is excessive compared to actual fundamental changes.

• ② Semiconductors fell for 8 consecutive days… Funds move to defensive stocks

The Philadelphia Semiconductor Index fell for eight consecutive trading days, reflecting a decline in short-term investment sentiment.

The longest continuous decline in history was 9 trading days, twice in 1996 and 2006.

Some funds removed from AI and semiconductors are moving to defensive stocks such as energy, utilities, and consumer staples.

Recently, there have been reports that hedge funds are also increasing their proportion of defensive stocks.

The rise in international oil prices was a burden on the stock market, but the decline in U.S. Treasury yields due to demand for safe assets was positive.

It is also noteworthy that rather than the entire U.S. stock market collapsing, there was a movement of funds between industries.

• ③ French financial instability highlighted… Pay attention to interest rate and dollar movements

In addition to AI and semiconductors, French financial and political instability also emerges as a new market variable.

As French government bond interest rates rise to the highest level in more than 20 years, caution about European financial instability is growing.

The interest rate gap between French and German 10-year government bonds has widened to a high level since the European fiscal crisis, reflecting the market's risk premium.

If the French problem spreads to the European bond market and the weakening euro, it is likely to stimulate dollar strength and global interest rate volatility.

This week, we also need to check the impact of unrest in France on U.S. Treasury yields and the dollar index.

Market Man's Perspective

AI-related noise has been going on almost every day for nearly two weeks. Investment sentiment is not easily recovering due to the constant negative news, from Coreweave's debt problem to China's memory, Antropic's corporate value, and hedge fund-related rumors.

Supply and demand are also unstable. While the scale of share repurchases has recently decreased, it will also be confirmed whether Samsung Electronics and SK Hynix will resume share repurchases in future conference calls. Here, a new variable has been added: whether French financial instability stimulates interest rates and the dollar.

On the other hand, the recent decline is quite large compared to changes in the actual economy and corporate performance. KOSPI plunged 14.5% last week, recording its largest weekly decline since October 2008. There have only been six cases in the past where it fell more than 20% over 8 trading days.

In the short term, we need a process to alleviate AI-related negative news and supply and demand instability. At the same time, it is time to pay attention to the drop itself, which has grown to a historically rare level. Considering volatility, it is necessary to look at the movements of industries and existing leading stocks that have undergone significant corrections after recent strong performance.

Today's checkpoint

AI: Will concerns regarding Coreweave and Antropic spread further?

Semiconductor: Will the Philadelphia Semiconductor Index rebound after falling for 8 consecutive trading days?

Supply and Demand: Changes in foreign supply and demand of large stocks such as Samsung Electronics and SK Hynix

France: Will fiscal and political instability spread to European bonds and the dollar?

Fall: Attempt to rebound from oversold territory after a -14.5% plunge last week.

Source: Market Man's stock story t.me/shmstory

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