"The plunge is over": Expert says the stock market will rise in August, advises cutting Samsung Electronics and SK hynix holdings to 50%

[Financial News] The domestic stock market, which has recently been hit by a sharp selloff, may gradually recover in August.
Yeom Seung-hwan, an executive director at LS Securities, said on the YouTube channel "Jisik Hansang" on the 6th that "the plunge appears to be over." He cited the sharp decline in margin loan balances and easing concerns over the semiconductor industry as reasons.

Yeom explained that July's market slump was the result of a combination of doubts about the semiconductor industry and forced liquidations tied to leveraged investing. He also stressed that margin loan balances fell sharply during the selloff.
When investors who bought stocks on margin fall into a collateral shortfall as share prices decline, brokerages carry out forced sales. Yeom said that because much of that forced liquidation has already taken place, the likelihood of additional panic selling has decreased.
"When the market was strong in May and June, margin loan balances rose to about 38 trillion won, but they have now fallen to around 27 trillion won," Yeom said. "About 11 trillion won in margin funds has flowed out, so a large portion of the urgent selling pressure has already been relieved."

Another reason Yeom expects the market to recover in August is his view that concerns over the semiconductor industry were overstated. Contrary to market worries, he said supply shortages are likely to continue for some time, citing recent earnings reports from chipmakers.
In particular, he pointed to Samsung Electronics and SK hynix forecasting supply shortages even in 2028. "That could be evidence that the semiconductor cycle has not yet reached its peak," he said. He also noted that recent earnings calls from major Big Tech firms did not signal cutbacks in investment. Instead, they suggested spending would increase further. He added that expanded investment in AI data centers is also supporting the semiconductor outlook.
The key difference between past semiconductor cycles and the current AI semiconductor cycle is that demand is not temporary. Yeom said, "AI data center demand is not like the iPhone, which becomes a fad and then disappears. It keeps coming." He explained that unlike past semiconductor demand surges driven by smartphone adoption, which rose sharply for a period and then slowed, AI data centers continue to be built, creating a step-by-step increase in demand.
Because semiconductor stocks have swung sharply in a short period, he expects any future gains to be gradual. "Since July saw such extreme volatility, August will be the start of a recovery period that moves upward step by step," Yeom said. "Investors who endured July can afford to watch the market without rushing."

Beyond semiconductors, Yeom highlighted power infrastructure and shipbuilding as sectors to watch. "Many parts of the United States power grid are more than 60 years old, so replacement demand is large," he said. "There are not many companies worldwide that can produce extra-high-voltage transformers, and supply is tight enough that delivery after ordering takes a long time." He specifically pointed to companies involved in power infrastructure, including transformers and cables.
He also advised investors heavily concentrated in volatile stocks to diversify their portfolios. "If 80% of your portfolio is made up of highly volatile companies, you need to bring that down to 50% or less," Yeom said, emphasizing the need to reduce volatility with assets such as gold and high-dividend stocks. He added that investors could include gold as part of the portfolio because it is considered a safe-haven asset, or use dividend-paying companies such as banks to soften the volatility of a growth-stock-heavy portfolio.
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