October (month 10) Stock Market Direction: Ultimately, Interest Rates Will Decide | Sung Sang-hyun, Executive Director at ABP Asset Management & Park Myung-seok, Curator [Weekend Interview]

Executive Director Seong Sang-hyeon explains that even though U.S. interest rate hikes have begun, a rapid return to low interest rates is unlikely as long as investment in AI and industrial facilities continues, and that long-term interest rates are influenced jointly by growth, expected inflation, and the term premium associated with Treasury supply and demand. He expects the U.S. government to try to curb a surge in long-term interest rates rather than give up its drivers of growth, using issuance plans that reduce the supply of long-term Treasuries and increase demand for short-term securities, buybacks, adjustments to banking regulations, stablecoins, and other measures. In his view, funds are currently concentrating in companies with the cash flow and operating profits to withstand high interest rates, but the range of stocks rising can broaden only if investment in AI infrastructure leads to cost reductions and productivity gains across multiple industries. He argues that when Federal Reserve tightening and government fiscal and industrial policies operate simultaneously, liquidity is difficult to assess solely through the policy rate as in the past, and changes in bank lending and broad money must be monitored. For investing, he advises identifying, in stages, companies that are actually receiving capital expenditure funds as revenue and profits now, rather than focusing on expectations of growth in the distant future, and shifting attention to the next beneficiaries when those companies invest in turn. He believes that although margin trading has declined and funds waiting to be invested have increased in the Korean stock market since the sharp fall in July (month 7), concerns about a peak in the memory industry cycle and high interest rates remain, so the rebound's validity needs to be confirmed. He says that increased profits at Samsung Electronics and SK hynix and continued cancellation of treasury shares are conditions for a reassessment of their valuations, and that in October (month 10), whether U.S. long-term interest rates stabilize or surge further will be the key indicator to watch for the direction of stock markets in Korea and abroad. All directional outlooks are the speaker's conditional judgments and do not establish definite short-term price predictions.