Why Stock Prices Rise Even with High Interest Rates: “This Is Completely Different from Past Cycles” | Seong Sang-hyeon’s Macro Beyond, Part 3-1

Seong Sang-hyeon characterizes the recent market as an era of “capital bottlenecks,” distinct from the long-running regime of low interest rates and disinflation. He explains that when the US government raises surplus liquidity through Treasury securities and spends it on subsidies and capital expenditures in strategic industries, money is reallocated from deposits through government accounts into corporate accounts, and additional investment by supported companies and bank lending can create new broad money. Easing bank regulations and large-scale capital investment by Western countries could support this credit expansion. While AI investment and productivity improvements underpin growth, inflation is unlikely to fall readily to 2%, making an environment of moderate to moderately high interest rates likely to persist. He therefore argues that rather than following the old formula of avoiding technology stocks because interest rates are high, investors should examine where government and private funds are moving and whether those funds generate actual profits and cash flow. The market is shifting from a phase in which the entire index rises together to an era of selection, with widening differences among companies. He presents industry growth rates, earnings estimates, and relative returns as three steps for identifying market-leading stocks. Growth rates identify candidate industries for investment, upward revisions to EPS and profit margins indicate what to buy, and relative strength against the market shows when money is flowing in. High revenue growth alone is insufficient; market expectations, costs, cash flow, and valuations must also be examined. AI data centers are a representative leading sector where growth has spread across GPUs, memory, servers, networking, power, and cooling, with financial performance and share prices rising together. By contrast, he explains that industries such as uranium, where revenue has grown but share prices remain weak, can become candidates for later-emerging market leaders when long-term contract prices, production volumes, costs, operating cash flow, and relative strength improve.