Bio and Shipbuilding ETFs Rise While AI Declines

Joseon 'Performance'·Bio US Interest Rate Cut Expectations '↑'
Concerns Over Delayed AI Profitability Visibility '↓'

The returns of exchange-traded funds (ETFs) related to bio and shipbuilding sectors are increasing. The bio sector seems to be influenced by expectations of interest rate cuts in the U.S., while the shipbuilding sector is affected by the continued outlook for improved earnings. On the other hand, AI-related ETFs, which had shown strong upward trends until recently, are experiencing sluggish performance amid controversies over profitability realization.

According to the Korea Exchange on the 2nd, based on the closing price of the previous day, the ETF with the highest stock price increase over the past month was SOL JoseonTOP3 Plus, recording a return of 22.29%. HANARO Fn Joseon Shipping also rose by 15.54%. Along with these, KODEX K-Green Ship Active increased by 11.43%, showing a steep rise in shipbuilding-related ETFs.

The reason for the high returns of shipbuilding-related ETFs is that shipbuilding stocks posted earnings surprises. HD Korea Shipbuilding & Offshore Engineering recorded an operating profit of 376.4 billion KRW in the second quarter of this year, a 429% increase compared to the same period last year, and Samsung Heavy Industries posted 130.7 billion KRW, up 122% during the same period. Kwangsik Choi, a researcher at Daol Investment & Securities, explained, "The background of the surprise is the stabilization of production through the deployment of foreign workers and improvement in the mix of high-priced orders," adding, "Since the cost reduction of plate input awaits in the second half, mix improvement will continue until 2026."

Along with this, bio ETFs also show high returns. TIGER BioTOP10 jumped 17.79%. TIGER KOSDAQ150 Biotech, TIGER Healthcare, and KODEX Healthcare also recorded increases in the 15% range.

The rise in bio ETFs is closely related to the U.S. interest rate cuts. The U.S. Federal Reserve (Fed) kept the benchmark interest rate unchanged at 5.25?5.50% as expected after the Federal Open Market Committee (FOMC) meeting on the 31st (local time). However, it also indicated a stance suggesting a rate cut in September. In addition, the U.S. Biosecure Act is expected to have a positive effect. Jaekyung Park, a researcher at Hana Securities, said, "Concerns that had suppressed stock prices in the first half are being resolved," and added, "It is time to expect a re-rating of the KOSPI pharmaceutical and bio sectors overall."

However, the returns of AI-related ETFs, which had led the market so far, remain sluggish. There are concerns about when profitability related to big tech's AI investments will materialize. As a result, TIGER AI Semiconductor Core Process fell 19.59%, and KODEX AI Semiconductor Core Equipment, SOL Semiconductor Post-Process, and SOL AI Semiconductor Materials and Components also dropped more than 15%.