[New Money Move] ② Semiconductor Stocks and Real Estate Attractiveness Revived

Strong Dollar Eases, Rate Hike Pause, and Optimism for China's Economy
Avoid Expecting Dramatic Changes... Interest Rate Shifts Are Key

[Asia Economy Reporter Park So-yeon] "How about the 00 stock?" "The building prices there have dropped a lot." Recently, private bankers (PBs) managing funds for asset owners have been receiving these kinds of questions again. The investment stance of asset owners, who had huddled into safe assets amid uncertainty, is changing. Investors who experienced bond yields of 10% and deposit rates in the 5% range at the end of last year now have higher expectations than ever. As interest rates and exchange rates stabilize, there is an active movement to seek undervalued risky assets.

In-a Oh, Executive Director at NH Investment & Securities Premier Blue Gangbuk Center, is paying attention again to equity-linked securities (ELS), which investors had avoided due to large losses last year. Executive Director Oh said, "I usually take a conservative approach to ELS, but I bought some in January this year," adding, "This year, sectors that were previously overlooked could become investment alternatives." Since stock prices have already fallen significantly, the risk of principal loss in ELS products is lower than before. This implies that if aiming for returns higher than deposit rates, it is worth considering ELS as an investment target again.

Optimism is also rising, forecasting a rebound in the stock market driven by strong foreign buying amid stable dollar and interest rate trends. Experts analyze that if the dollar's strength continues to ease, additional net purchases by foreigners can be expected. Although the U.S. Federal Reserve's tightening stance will continue for the time being, the market already expects the terminal interest rate to top out around 5.0%, making it unlikely for the dollar to regain strength. Particularly, expectations for China's manufacturing recovery are also boosting hopes for Korea's export recovery. In January, prices of risky assets such as virtual assets and emerging market stocks rose sharply.

Yong-seok Yoo, Team Leader of the Club1 Hannam PB Team at Hana Securities, said, "Since putting money in demand comprehensive asset management accounts (CMA) yields interest rates in the 3.8% range, there was a lot of standby funds, but some people are waiting for bond yields to rise, and demand is shifting toward stocks or small office buildings." Yoo added, "About 20-30% of standby funds are moving into stocks," and predicted, "Once a full-scale interest rate cut begins, funds will move more rapidly into risky assets."

High-net-worth individuals, who move faster than retail investors, are predicting the second half of this year as the timing to buy real estate despite expectations that the high-interest-rate environment will continue for some time. Executive Director Oh said, "Many asset owners say the second half of this year is the timing to buy real estate." This is because real estate prices have fallen significantly due to the prolonged high-interest-rate environment, and market interest rates are moving first. Yang Ji-young, Research Center Director at real estate information company RealToday, said, "The provinces are still difficult, but the decline in the metropolitan area, especially Seoul Gangnam area, is slowing," adding, "Although transaction volumes are not increasing nor is the subscription market heating up again, if interest rate changes occur, market sentiment could reverse."

Promising sectors in the stock market include semiconductors, secondary batteries, and defense industries. Although stock prices struggled due to recession concerns, these sectors are recovering demand faster than expected. Lee Sang-hee, Director (CIO) of the Military Mutual Aid Association's Financial Investment Division, said, "I am focusing on promising stock sectors such as semiconductors, secondary batteries, IT, and defense." Major PBs pick the semiconductor sector, which is bottoming out, as their 'One Pick.' Attention is also drawn to the fact that the value of high-quality unlisted companies that gave up IPOs due to last year's market downturn has significantly decreased.

Only a Reduction in Uncertainty... Calls for Caution Including Diversified Investment

Although factors such as inflation stabilization, slowing decline in leading economic indicators, reduced volatility in exchange rates and interest rates, and expectations for China's economic recovery are positive variables for stock market recovery, cautious views that there will be no dramatic market rise are also considerable. The stock market experienced a first rebound at the beginning of the year, creating valuation burdens, and concerns about economic slowdown and corporate earnings deterioration remain negative factors. The global tightening intensity is expected to continue for some time, adding to uncertainty. The current rebound is interpreted as a reflection of expectations due to improved financial conditions rather than a recovery in the real economy.

Sang-mi Kim, Executive Director and Head of Asset Allocation Strategy Team at Kiwoom Asset Management, warned, "A V-shaped rebound could be a 'false hope,'" adding, "The dramatic change we want may not come." Kim predicted, "Volatility has only decreased somewhat," and "It is highly likely that the market will remain sideways in a box range, neither good nor bad, for a considerable period." Yong-seok Yoo of Hana Securities PB Team said, "Rather than moving funds too hastily, I recommend moving step by step with time intervals, dividing by 10% each time."