[Seoul Pre-Market Brief] October 23rd: AI Financial Concerns and Oil Prices Send Markets Tumbling

Meta CAPEX expansion, AI financial concerns reemphasized due to Jensen Huang's remarks about lack of capital... Nasdaq drops significantly, oil price surges to $99.47, MSCI Korea -4.88%... Semiconductor stocks make another big correction

Key market trends

• ① 'Investment cost' rather than AI growth… Meta, Tesla, and Coreweave share burden

Wall Street's positive evaluation of Meta's performance itself was predominant, but capital expenditure issues emerged again.

Meta raised its capital expenditure forecast, which was originally expected to be $130 billion, to $140 billion, and its plan to issue non-voting C shares also attracted investors' attention.

Given that C shares can be used to raise funds in the future, the issue of funds needed to expand AI investment has again become a topic of interest in the market.

Tesla lowers its annual capital spending forecast, raising questions about the pace of expansion of its AI and robotics business

It is burdensome that Elon Musk lowered his forecast for vehicle sales in 2030 from 20 million to 5 million and mentioned the need to lower expectations for Optimus.

Jensen Huang mentioned that the limiting factor for NeoCloud's growth is capital, not demand.

Regarding Coreweave demand, he emphasized that it was "at the level of breaking the charts," but the market reacted more sensitively to the need for large-scale financing and the possibility of financial burden.

Major AI-related stocks, including Coreweave, plunged, leading the Nasdaq decline.

• ② Semiconductors plummet again… Biggest drop since June

Major semiconductor stocks such as Micron, AMD, and SK Hynix ADR fell significantly.

Even though Lam Research reported performance that exceeded market expectations, its stock price plummeted, affecting semiconductor investment sentiment.

The semiconductor industry index fell by the largest amount since June 23.

Last week, a large amount of money inflowed into semiconductor ETFs, but the market remained cautious as it failed to prevent the decline in stock prices.

On the other hand, Apple, which was evaluated as having relatively low exposure to AI, was the only large technology stock to rise.

The Dow Jones Industrial Average strengthened as funds withdrawn from AI stocks moved to defensive stocks such as consumer staples, utilities, and healthcare.

Rather than unilateral selling of the entire market, there is a flow of funds moving from AI and technology stocks to other industries.

• ③ Oil price surges to $99… US 10-year Treasury yields at 4% due to preference for safe assets

International oil prices rose 2.39% to close at $99.47 per barrel due to continued negative news related to the Middle East.

As expectations for negotiations between the United States and Iran weaken, uncertainty surrounding the situation in the Middle East expands again.

The news that Aramco ordered its employees to work from home as the Houthis continued to attack Saudi Arabia also had an impact on the rise in oil prices.

As geopolitical tensions and AI stocks plummeted, preference for safe assets strengthened, and the U.S. 10-year Treasury bond yield fell to 4.97%, below 5%.

The volatility index soared 14.09% to 19.03.

The MSCI Korea index fell 4.88% and overnight futures also weakened 2.61%.

Market Man's Perspective

Over the past two weeks, the domestic stock market has been showing significant volatility in the 5,500 to 5,750 point range. The trend of plummeting and big tech performance defending itself every time AI-related concerns arise is repeated.

Looking at the confirmed numbers alone, the positive aspects are clear. SpaceX and Meta are continuing to invest in AI, and the performance of Samsung Electronics and SK Hynix has also been confirmed. Semiconductor exports in the fourth quarter are also maintaining a strong trend so far.

Conversely, what the market is worried about is the speed of AI monetization, delays in data center construction, and financing issues. In particular, NeoCloud has complex investment, equity, and business relationships with AI ecosystem companies, including NVIDIA, so the market is wary of the possibility that a specific company's financial problems may spread to other companies. Rather than saying that an actual problem has been identified, the risk premium for this connection itself has increased.

Recently, SK Hynix's short-term decline has expanded to the highest level since 2008. Currently, profits are increasing rather than decreasing, and the outlook is maintained that next year's performance is also likely to increase compared to this year. It is difficult to say that the bottom has been confirmed, but it is something to look into as the stock price has fallen significantly compared to performance.

Ultimately, the market is moving from evaluating all companies together solely because of AI to distinguishing between companies that actually make profits and companies that rely on expectations. Considering short-term volatility, it is necessary to continue to check stocks that have undergone significant corrections after recent strong performance, stocks purchased by institutions in October, and stocks with a high possibility of improving performance.

Today's checkpoint

AI Finance: Will Meta CAPEX Expand and NeoCloud Funding Concerns Spread Further?

Semiconductors: Supply and demand from Samsung Electronics and SK Hynix following a plunge in U.S. semiconductors

Oil price: Will WTI break through $100 again after $99.47?

Foreign Investors: Foreign trading intensity after MSCI Korea -4.88%, overnight futures -2.61%

Supply and Demand: Will the movement of funds from AI and semiconductors to defensive stocks continue in Korea?

Key indicators

Dollar Index 101.67 (-0.11%)

International oil price $99.47 (+2.39%)

Volatility Index 19.03 (+14.09%)

US 10-year Treasury bond interest rate 4.97%

MSCI Korea Index -4.88%

Night Futures -2.61%

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

YouTube: Sihwangman TV www.youtube.com/@blueoak1004

This article was rewritten from Shihwangman's Stock Story Telegram post with the author's consent. All content may contain errors and cannot be used as a basis for buying or selling as it is not a recommendation to buy or sell. The content of this post cannot be used as legal basis under any circumstances.