[Good Morning Market] Temporary Reversal in Semiconductor Concentration... KOSPI Rally Momentum Remains Unchanged

On January 7, the KOSPI is expected to maintain its upward trend, despite the possibility of a temporary reversal in the recent concentration on semiconductor stocks.

In the previous session, the Dow Jones Industrial Average in the New York stock market closed at 49,462.08, up 484.90 points (0.99%) from the previous day. This is the first time that the Dow has closed above the 49,000 mark.

The S&P 500 Index also hit a new all-time high, ending at 6,944.82, up 42.77 points (0.62%). The tech-heavy Nasdaq Composite finished at 23,547.17, up 151.35 points (0.65%) from the previous session.

The rally in semiconductor stocks, which have established themselves as leading stocks in both the U.S. and Korean markets since the beginning of the year, continues. Despite short-term valuation pressures, new upward catalysts are providing justification for the sharp rise. At the world's largest electronics and IT exhibition, CES 2026, Jensen Huang, CEO of Nvidia, stated that "inference will become more important in the future AI industry" and mentioned that memory from both domestic and global semiconductor companies, such as Micron, will be installed in the next-generation GPU "Vera Rubin." This served as a key catalyst.

However, there are clear differences in performance among individual stocks within the same AI value chain. Following Nvidia-related comments in the U.S. market the previous day, AMD fell by more than 3%, Broadcom remained flat, Microsoft gained over 1%, and Alphabet weakened, demonstrating a differentiated trend. While the growth narrative for the overall AI industry remains valid, polarization within the value chain is underway.

The domestic stock market remained strong despite volatility. On the previous day, the KOSPI initially declined by over 1% due to profit-taking, but rebounded sharply during the session, surpassing the 4,500 mark, driven by net buying from individual investors, expectations for CES, and news of new shipbuilding orders. While the KOSPI rose by 1.5%, the KOSDAQ fell by 0.2%, showing a divergence.

Today, the market is expected to open higher, influenced by the surge in U.S. semiconductor stocks such as Micron and SanDisk due to momentum from CES 2026. However, as fatigue from recent rapid gains and anticipation for Samsung Electronics' preliminary earnings report set in, profit-taking is likely to occur. During the session, there is a high possibility of sector rotation.

In the first three trading days of the year, the KOSPI soared by more than 300 points, marking an unprecedented bull market. However, this rapid rise has triggered technical overbought signals. The Relative Strength Index (RSI) has entered overbought territory for the first time since November last year, indicating increased short-term pressure.

The concentration in certain stocks and sectors is also pronounced. Since the start of the year, while the KOSPI has risen by 7.4%, the KOSPI 200 has gained 8.8%, but the KOSPI 200 Equal Weighted Index has only increased by 1.7%. By market capitalization, large-cap stocks rose by 9.0%, while mid-cap stocks gained 2.3% and small-cap stocks 3.1%.

Since January, only three sectors have outperformed the KOSPI: semiconductors (14.3%), trading companies & capital goods (10.6%), and machinery (9.3%). This concentration has continued for two consecutive months, following December last year.

The market is also paying attention to the possibility of a short-term reversal centered on semiconductors, which are considered leading stocks. There are concerns that a "sell-on" event could occur, triggered by specific events such as Samsung Electronics' fourth-quarter preliminary earnings announcement. However, as the growth story for the overall AI industry remains intact, there is also talk that, during the earnings season, if sector rotation occurs, inflows may spread throughout the broader AI value chain beyond semiconductors.

Han Ji-young, a researcher at Kiwoom Securities, stated, "It is likely to be a temporary reversal limited to resolving the simple concentration phenomenon, and it is unlikely to change the overall stock price trend. This is because the momentum for KOSPI earnings improvement continues and the recent rally drivers, such as net foreign buying, remain unchanged."