Next week, the domestic stock market will focus on the sustainability of AI investments by major U.S. tech companies and the results of the Federal Open Market Committee (FOMC). The market experienced a sharp decline due to the emergence of Chinese AI models and geopolitical risks in the Middle East, but sentiment in semiconductor investments partially recovered following Alphabet's announcement of increased capital expenditures (CAPEX). However, with ongoing military tensions between the U.S. and Iran and concerns over high oil prices, high volatility is expected to continue based on earnings and macroeconomic variables.
According to the Korea Exchange, on July 24, the KOSPI closed at 6,690.02, down 406.87 points (5.73%) from the previous trading day, while the KOSDAQ finished at 748.22, down 42.06 points (5.32%). For the week of July 20-24, the KOSPI and KOSDAQ fell by 1.91% and 5.51%, respectively.
Last week, the stock market was pressured by concerns over the semiconductor industry and geopolitical instability. The Chinese AI startup Moonshot AI unveiled its high-efficiency AI model 'Kimi K3,' raising fears of declining demand for GPUs and high-bandwidth memory (HBM). Additionally, renewed military tensions between the U.S. and Iran led to rising international oil prices and market interest rates. This prompted profit-taking in the semiconductor sector, but Alphabet's upward revision of its 2026 CAPEX guidance, alongside cloud growth, alleviated some concerns about a slowdown in AI investment.
Signs of recovery in supply and demand were also observed. While individual investors continued to liquidate leveraged positions, foreign investors led a rebound through bargain hunting. Analysts suggest that the recent adjustments reflect a normalization process rather than a deterioration in the semiconductor industry's outlook.
Lee Jae-won, a researcher at Yuanta Securities, stated, "What collapsed in July was the excessively accumulated leveraged positions rather than semiconductor profits. Considering Alphabet's CAPEX expansion and customer demand, there has been no actual change to support the peak-out theory for AI investment and semiconductor stocks." He added, "While passing the peak of forced selling does not necessarily indicate a trend reversal, prioritizing large-cap semiconductor stocks and expanding positions in oversold sectors could be a suitable strategy if supply and demand improvements spread."
Looking ahead, global monetary policy and the performance of major tech companies are expected to be key variables influencing market direction. Starting on July 29, the U.S. FOMC and SK Hynix's earnings report will be released, followed by the second-quarter GDP figures for the U.S. and Eurozone, as well as earnings from Microsoft, Meta, and Qualcomm on July 30. On July 31, the Bank of Japan's monetary policy meeting and earnings reports from Apple and Amazon are scheduled.
Economic indicators are also expected to significantly impact investor sentiment. The market anticipates that the FOMC will keep interest rates steady, but attention will be on the Federal Reserve's messaging regarding future monetary policy direction. The U.S. second-quarter GDP, released on the same day, is expected to confirm robust consumer and investment trends, while South Korea's July exports, set to be announced on August 1, are projected to continue a strong growth trend, particularly in semiconductors. Stronger-than-expected growth and inflation indicators could dampen expectations for interest rate cuts, potentially putting pressure on the stock market. Conversely, if AI investment expansion and strong exports are reaffirmed, investor sentiment in the semiconductor sector could improve significantly.
Analysts predict that the market will continue to experience a range-bound phase as earnings confirmations unfold. If major tech companies like Meta, Microsoft, Apple, and Amazon can simultaneously demonstrate both an expansion in AI investments and profitability, it could further restore investor sentiment in the semiconductor sector. However, there are also forecasts that prolonged geopolitical risks in the Middle East and rising international oil prices could lead to increased market volatility.
* This article has been translated by AI.
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