The KOSPI rebounded for a second straight session on the 19th, narrowly reclaiming the 5,700 line after seven consecutive days of declines. The benchmark index closed at 5,768.01, up 99.96 points, or 1.76%, from the previous session. Market experts said that while the index has pared its losses after a sharp selloff, volatility has not fully subsided, and investors should adopt a selective strategy centered on blue chips such as large-cap chipmakers. The reasoning is that focusing on blue chips backed by earnings minimizes uncertainty over the long term. Some struck a cautious note, however, warning that downward pressure on the domestic market could build again depending on whether global Big Tech earnings reignite concerns about overheated artificial intelligence investment, and on the direction of foreign investor flows.
Hold Chip Stocks Rather Than Sell Prematurely
Experts advised that the more volatile the market, the more investors should focus on blue chips such as large-cap chipmakers, where earnings momentum remains intact. Their view is that profit outlooks for chipmakers remain firm, that the recent short-term plunge has lowered valuation pressure, and that it is difficult to argue the long-term growth potential of the AI industry has been damaged. They stressed that rather than selling chip stocks prematurely, investors should maintain existing holdings while watching for market uncertainty to clear.
Ko Tae-bong, head of the research center at iM Securities, said: "Rising interest rates are fundamentally unfavorable for stock investing, so investors should buy semiconductor and power-related names that are expected to deliver growth exceeding the burden of higher rates." He added: "Once the AI transition gets fully underway, sectors such as semiconductors, power and defense, which are core components of AI data centers, cannot help but grow over the long term, and physical AI will drive an explosive increase in memory demand."
Lee Jong-hyung, head of the research center at Kiwoom Securities, said: "Given how sharply the market fell in the short term, this is a timing for a technical rebound." He added: "Because the domestic market moves around chip stocks, it is worth keeping the current portfolio while turning attention to defensive plays such as bank and insurance stocks."
Kim Kyung-bae, deputy branch manager at Hana Securities THE H1 W, also said it is worth looking at secondary battery and energy storage system (ESS) related stocks while maintaining existing chip holdings. "Share prices of secondary battery and ESS names have fallen sharply, and market expectations have come down as well," he said. "If profitability improves, there is room to expect share price gains going forward."
Split Portfolios 50-50 Between Stocks and Safe Assets
Experts presented a response strategy calling for diversification that puts roughly half of a portfolio in stocks and half in safe assets during volatile markets. Chae Kyung-seop, a director at Shinhan Asset Management, suggested a mix of 50% stocks, 25% bonds, 20% cash and 5% gold for individual investors with a neutral risk profile. "It is advantageous to adjust the equity weighting while securing spare funds centered on cash and short-term bonds, then put that cash back into stocks in stages as conditions for a rebound are confirmed," he said. His view is that with short-term market volatility not fully resolved, carrying an equity weighting above 60% could expose investors to heavy losses.
Kim, the deputy branch manager, said investors should keep equities at 50% to 60% and hold 40% to 50% in safe assets. "For safe assets, I recommend going with 25% bonds and 10% to 15% in gold or cash," he said. "Rather than increasing equity exposure through bargain hunting, it is worth holding at current levels and watching events for a month or two."
Lee, the research center head, advised holding safe assets and risk assets such as stocks at equal weightings of 50% each to respond flexibly to market conditions. "Gold, which is viewed as a safe asset, could fall further in price if U.S. Treasury yields rise," he said. "Copper supply is limited, so its price is holding up well near historic highs. If you are buying commodities, copper is worth more attention than gold."
Watch Big Tech Earnings, Foreign Flows and the FOMC
Experts cited Big Tech earnings due late this month, interest rate pressure and unstable fund flows as variables that could renew anxiety in the domestic market. In particular, with the debate over AI profitability now in the open, market direction could shift depending on Big Tech results. They also forecast that U.S. interest rate uncertainty must ease before the foreign selling that has fueled flow instability settles down, allowing the KOSPI to sustain a trend rebound.
Park Yeon-joo, head of the research center at Mirae Asset Securities, said: "As the scale of AI investment expands, concerns about profitability have also grown, so Big Tech earnings will be a variable." She added: "Those doubts could affect the direction of fund flows, but it is premature to conclude that the 'AI revolution' is over."
Ko, the research center head, said: "To raise money for initial public offerings by companies such as Anthropic and OpenAI, investors have to pull funds out of emerging markets, and Korea is a market where large sums are easy to withdraw because liquidity is good." He added: "Individual investors do not need to be excessively swayed by short-term moves in foreign flows."
Chae, the director, said: "Rather than pinpointing a timing to turn buyer, investors should look for stability in long-term U.S. interest rates, improvement in AI companies' revenue and cash flow, and whether next year's chip profit outlook holds."