"Seasonality and US Election Uncertainty... Caution on Increased Market Volatility in September"

In September, advice was given to prepare for increased volatility. This is because it is a difficult period to view the market positively due to seasonal September stock market weakness and uncertainties surrounding the presidential election.

Yeom Dong-chan, a researcher at Korea Investment & Securities, explained in a report on the 4th, "In September, one should keep in mind the possibility of momentum slowing down," adding, "Seasonally, this is a period when earnings volatility is not large, but this year, it is a time to consider the possibility that the semiconductor industry's peak, which led the strong performance of large-cap stocks, may have been anticipated in advance."

He emphasized the need to pay attention to the fact that during periods of interest rate cuts, mid- and small-cap stocks outperformed large-cap stocks, and growth stocks outperformed value stocks. Researcher Yeom said, "The possibility of a U.S. base interest rate cut in mid-September is positive, but there is also past experience where the first rate cut was perceived as a positive catalyst," adding, "During interest rate cut periods, mid- and small-cap stocks and growth stocks showed stronger performance than large-cap and value stocks."

He diagnosed that the price momentum of the semiconductor sector, which led the stock market in the first half of this year, is inevitably slowing down. Researcher Yeom said, "Semiconductor sector earnings are still improving. However, considering past semiconductor cycles, the earnings peak is expected to be confirmed in the first half of 2025," noting, "Historically, semiconductor sector stock prices led earnings peaks by 6 to 8 months."

Ahead of the release of the Korean-style Value-Up Index this month, he advised approaching it from the perspective of long-term shareholder value enhancement rather than short-term supply and demand improvement. He said, "Looking at the Japanese case, it would be more appropriate to approach it from the perspective of long-term shareholder value enhancement rather than short-term supply and demand improvement caused by the release of the Value-Up Index."