[Market Man's Closing Briefing] October 7, decline due to uncertainty in performance, oil price, and supply and demand

Semiconductor for sale ahead of Samsung Electronics earnings... SK Hynix ADR's 6.4% decline is also burdensome

Due to the rebound in oil prices, the 10-year US Treasury yield rose again to 5.31%... Asian stock markets weakened together.

Key Market Trends

① Caution ahead of Samsung Electronics’ performance… Semiconductor stocks are weak

At the beginning of the market, it attempted to rise due to the decline in US Treasury yields and expectations of AI performance.

As French fiscal risks eased, interest rates fell, and confidence in the performance of U.S. AI-related companies such as AMD and Marvell Tech also had a positive effect.

However, due to caution ahead of Samsung Electronics' earnings announcement and weakness in U.S. memory stocks, semiconductor stocks were put on sale.

While SK Hynix's ADR fell 6.4%, the strong won, uncertainty about performance bonuses, and reports of delays in the construction of some data centers weighed on investment sentiment in memory stocks.

The fact that Samsung Electronics and SK Hynix's share buybacks are nearing completion is also a factor in supply and demand caution.

② Oil prices rebound due to tensions in the Middle East... 10-year note again 5.31%

International oil prices rebound as the military battle between Saudi Arabia and Houthi rebels continues

As reports of air strikes, including destruction of airport facilities, emerge, vigilance about the situation in the Middle East increases.

As oil prices rise, the US 10-year Treasury bond yield also rises again to 5.31% during Asian trading.

News of Google suspending construction of its data center in Finland also stimulated concerns about delays in AI infrastructure investment, which have been repeatedly raised recently.

The fact that LG Electronics announced earnings that fell below market expectations also heightened caution ahead of Samsung Electronics' earnings disclosure.

③ Large growth stocks for sale… Pharmaceuticals, entertainment, and cosmetics rise

Recently strong industries such as semiconductor, automobile, secondary battery, and communication equipment are sluggish.

On the other hand, buying forces are flowing into pharmaceuticals, entertainment, cosmetics, securities, shipping, etc.

As funds withdrawn from large growth stocks moved to some industries, differentiation by stock continued even as the index fell.

Supply and demand and industry

Foreign Investors are net sellers of electrical and electronics, transportation equipment, finance, and metals, and net buyers of chemicals, food, distribution, and insurance on the KOSPI.

Institutions are net sellers of electricity, electronics and transportation equipment and net buyers of finance and chemicals.

In KOSDAQ, both foreign investors and institutions were net sellers of machinery, equipment and electrical and electronic stocks, and net buyers of entertainment-related stocks.

The Man's Perspective

Wait-and-see sentiments and cautions have intensified ahead of Samsung Electronics' earnings announcement. The market is expecting good performance, but attention is focused on how long the improvement will continue rather than on the absolute level of performance.

As the semiconductor industry has recently been highly volatile, some are of the opinion that it is necessary to check profit stability through long-term contracts. In addition, as the end of share repurchase by Samsung Electronics and SK Hynix approaches, the burden of supply and demand is also reflected.

Because there are many holidays in early October, weekly options and option expiration schedules are concentrated in the early part of October. Index volatility is likely to continue for some time as various factors overlap, including performance, oil prices, interest rates, and the end of share buybacks.

However, the trend of performance improvement in the semiconductor industry itself has not stopped. Stock markets may continue even while index volatility increases, so it is necessary to look at changes in supply and demand, focusing on recently strong industries and policy and investment-related stocks.

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.