"Aiming for a short-term rebound, bought tech stocks"…Seohak Gaemi in 'panic'

Increase in Net Buying of Tech Stocks Over the Past Two Weeks
Net Purchase of Semiconductor Index 3x Leveraged ETF Amounts to 175.5 Billion KRW
ETF Drops About 18% in One Day Due to August CPI Shock

[Asia Economy Reporter Minji Lee] The August U.S. CPI (Consumer Price Index) announcement event, which was expected to pass without incident, shocked the market, causing short-term rebound expectations and putting overseas stock investors holding tech stocks (Seohak Gaemi) into a state of 'panic.'

According to the Korea Securities Depository's securities information system, SEIBRO, from the 1st to the 9th of this month, the stock most sought after by domestic investors over two weeks was the Direxion Daily Semiconductor 3x Leveraged ETF (SOXL), with net purchases worth about 175.5 billion KRW. This ETF invests in the Philadelphia Semiconductor Index, which includes major U.S. semiconductor companies such as Intel (8.2%), Broadcom (8.16%), Nvidia (7.91%), and Qualcomm (4%). When this index rises, investors can gain profits equivalent to three times the increase.

Additionally, during the same period, investors expanded their appetite for tech growth stocks by purchasing ProShares UltraPro QQQ ETF (165.5 billion KRW), Nvidia (38 billion KRW), BMO Micro Sector FANG Innovation 3x ETN (BULZ, 16 billion KRW), BMO Micro Sector FANG+ 3x Leverage (11.9 billion KRW), and electric vehicle manufacturer Lucid (11.1 billion KRW). Initially, expectations grew that the U.S. August CPI would continue its downward trend since June (9.1%), leading to inflows of funds anticipating a short-term rebound in growth stocks.

However, following the CPI shock, the Nasdaq index, which had recorded a rise of over 4% this month, plummeted more than 5% in a single day, creating a panic market. SOXL, the most purchased stock by overseas investors, fell more than 18% in one day due to a sharp decline in investor sentiment toward the semiconductor sector amid a surge in government bond yields. The Philadelphia Semiconductor Index plunged 6.18%. Additionally, the BMO Micro Sector FANG Innovation 3x ETN dropped over 20%, while ProShares UltraPro QQQ (-16%) and Nvidia (-9%) also continued their steep declines.

Stock experts advise that since Seohak Gaemi have heavily included growth stocks vulnerable to interest rate hikes in their portfolios, they should maintain a wait-and-see stance until the Federal Open Market Committee (FOMC) meeting scheduled for the 21st. The unexpected level of the CPI announcement has sparked debates over the extent of interest rate hikes and the levels of rates this year and next, increasing uncertainty. Jung Yong-taek, Chief Economist at IBK Investment & Securities, said, "This is not a stock market where short-term investments in growth stocks can yield profits," adding, "Market volatility is expected to increase during the Federal Reserve's blackout period, but approaching growth stocks in the long term remains valid."

This content was produced with the assistance of AI translation services.