As the global stock market resumes its artificial intelligence (AI) rally and the new stock price co..

As the global stock market resumes its artificial intelligence (AI) rally and the new stock price continues to march, the KOSPI remains flat and contrasts sharply.

While the U.S. and Taiwanese stock markets have been hitting record highs this month, led by AI accelerators and advanced packaging value chains, the KOSPI has hardly found momentum to rise amid sluggish large semiconductor stocks with market capitalization.

Analysts say that the domestic stock market is showing a decoupling (decoupling) pattern with major stock markets amid the triple whammy of high dependence on memory semiconductors, steep appreciation of the won, and a gap in supply and demand.

According to the Korea Exchange on the 9th, the KOSPI has been adjusted more than 2% the previous day, and has not escaped the box, with the rate of increase of only 0.46% since August. Compared to the high point recorded on June 22, it is about 27% lower. The trend contrasts with the U.S. Nasdaq Composite Index and Taiwan's Jaseon Index breaking new highs every day this month and Japan's Nikkei 225 Index showing a steep rebound.

The recent stock market rally in major countries was driven by expectations that big tech companies continued to invest in AI facilities (CAPEX) and that the U.S. Federal Reserve (Fed) would adjust its pace of rate hikes. Since the U.S. raised interest rates last month, government bond rates have soared, but there has been no sign of a reduction in facility investment, leading to a relief rally centered on technology stocks in major countries. On top of that, Fed figures' remarks on the pace of rate hikes this month and the weakening outlook for an additional rate hike in September employment indicators below expectations pushed up stock prices further.

The decoupling pattern between major stock markets such as the U.S. and the KOSPI is also interpreted as a result of the expansion of the concentration by industry in a high-interest-rate environment rather than a separate negative factor. In fact, if you look inside the US stock market, the actual warmth is concentrated in a small number of large stocks related to AI infrastructure. On the other hand, small and medium-sized stocks with high interest rate sensitivity are alienated, and a small number of industries are supporting the rally. The Russell 2000 index, which is mainly focused on small and medium-sized stocks, has fallen nearly 9% from its peak as it has continued to decline since mid-August, when concerns over a rise in long-term government bond rates were repeated.

Goldman Sachs strategist Ben Snyder pointed out at the end of last month that "the dominance of AI-related minority-led stocks is supporting the index, but the market has shrunk to its lowest level since the dot-com bubble."

Even within the semiconductor industry, companies with large traditional cycle influences seem to have limited rebound. Micron shares are nearly 15% behind the June high. Broadcom, which is affected by traditional replacement cycles such as corporate software and communication chips, is also down more than 25% from its peak. The market has also been a direct hit on the domestic stock market, which is highly dependent on memory. This is because the memory industry is expected to raise its earnings estimates due to the expansion of high bandwidth memory (HBM) margins, while general DRAMs remain feared to be peak-out.

On top of that, the steep appreciation of the won and the gap in foreign supply and demand also added to downward pressure on the index. Since July, the Taiwanese dollar has weakened by 0.19% and the yen has appreciated by 2.74%, while the won has surged by 15.70% against the dollar, lowering the performance expectations of large export stocks. As a result, foreign investors continued to sell off 28.6872 trillion won on the KOSPI in the past month. As foreign funds continued to leave this month, net sales alone reached KRW 6.4459 trillion for five trading days.

"The sharp temperature difference between the U.S. and domestic stock markets is the result of the marginalization of the domestic stock market as the initiative of the AI cycle shifts from memory to customized semiconductors, small managers, and security software," said Hwang Hwang Hwang-hae, a researcher at LS Securities. "The environment in which exchange rates, oil prices, logistics burdens, and high interest rates are overwhelming global demand is expected to continue for the time being."