Amid wild swings following the Kospi's breakthrough above the 9,000 mark, a securities analyst is urging investors to focus on corporate earnings and growth fundamentals rather than short-term supply-and-demand flows. The recent sharp volatility reflects a technical correction driven by fund flows rather than any structural deterioration — making earnings-backed stocks the right place to concentrate.
On Monday, Yom Seung-hwan, an analyst at LS Securities, appeared on "Kim Jaewon TV," a YouTube channel with 540,000 subscribers, and attributed the market turbulence to the Kospi's rapid ascent. "The index came up to 9,000 too fast," he said. He added that concentration in Samsung Electronics and SK hynix had grown excessive, fueling an overheated market.
Yom attributed the correction primarily to foreign investor flows. "This correction is not an external economic shock — it is simply a supply-and-demand process," he said. "Foreign investors are mechanically rebalancing their portfolios to meet fund-mandated position limits on certain stocks, and that selling pressure should ease after July."
On the semiconductor sector, he said investors need to shed the old view of chips as a cyclical industry. "We need to ask ourselves whether our mental model of the memory chip cycle is still stuck in the past," he said. "Semiconductors are now becoming a security asset — the building blocks of data centers for Big Tech and for national governments."
"Rather than swinging between bust and boom, the sector will advance in a staircase pattern," he said. "If you understand this new cycle, the right move when prices drop sharply like this is to invest more, not to sell."
Looking ahead, Yom said the market is likely to see a rotation from leading stocks into laggards. He singled out the biotech sector on the Kosdaq as a beneficiary of government activation policies. He also highlighted industrials — shipbuilding, defense and power equipment — as promising areas that stand to gain from trade diversion amid the US-China trade conflict while also delivering solid earnings.
"Supply and demand is always a short-term issue," Yom said. "What determines share prices over the long run is ultimately fundamentals — earnings and growth. Companies with solid earnings will recover, so investors should review their portfolios now."
As the market pauses to catch its breath after a rapid rally, investor anxiety has grown. Analysts say the more important question is not the volatility itself but whether corporate profit outlooks remain intact. The key to navigating the second half of the year will be revisiting investment strategies focused on sectors and companies where earnings improvement continues, rather than being rattled by short-term shifts in fund flows.
rainbow@heraldcorp.com
