"Semiconductors Are Not for Selling Now"...Brokerage Houses Say "Hold, Don't Panic Sell"

[Financial News] Analysts say the volatility in semiconductor stocks, blamed as a key driver of the recent plunge in the domestic stock market, may have already passed its peak.
On the 30th, NH Investment & Securities said the main cause of the sharp decline was not reduced investment in Artificial Intelligence (AI) or worsening semiconductor conditions, but supply-demand distortions centered on leveraged exchange-traded funds (ETFs) tied to single stocks. It added that, since much of the excessive price correction has already taken place, a hold strategy is more appropriate than further panic selling at this point.
Ha Jae-seok, a researcher at NH Investment & Securities, said, "Concerns over the sustainability of AI capital expenditure (CAPEX), China's push to build up its semiconductor industry, geopolitical risks in the Middle East, and the possibility of higher interest rates have all been cited as reasons behind the recent slump in the AI hardware value chain." He added, "Given that the S&P 500 has remained firm, this correction was driven more by supply-demand factors such as leveraged funds than by damage to fundamentals."
Ha stressed that the Korean market has shown an unusual pattern this year, with stock prices and volatility rising at the same time.
He explained that as large semiconductor stocks such as Samsung Electronics and SK hynix rose, individual investors' fear of missing out (FOMO) intensified. As money flowed into leveraged ETFs tied to single stocks, demand for call options and hedging put options increased at the same time, adding to market volatility.
Ha also said volatility is likely to gradually stabilize in the near future. He noted that the net asset value of leveraged ETFs linked to Korean stocks has fallen to about one-third of its June 22 peak, and that Hong Kong will introduce a system from August to adjust the leverage of Samsung Electronics and SK hynix leveraged ETFs according to market conditions. He said this should ease excessive concentration in fund flows.
He maintained an optimistic view of the domestic market as well. Ha said, "It is now time to recall the lessons from March and April. Much of the domestic and external bad news has already been priced in, so this is a range where a technical rebound is possible." He added, "Whether U.S. big tech companies continue investing in AI will be the key factor determining the strength of the recovery in the Korean market."
He also kept his view that the AI rally in the United States is not over, but is instead in a short-term correction phase. Ha said, "The investment outlook for hyperscaler companies in 2027 is actually being revised upward," and added, "The market is now less worried about the end of AI investment and more focused on confirming its sustainability and profitability." He forecast that the United States and Japan will maintain a more favorable investment environment than Europe.


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