With caution still hanging over the pace of growth in the artificial intelligence industry, investors on South Korea's stock market are turning to manufacturers with no direct link to AI. Hanwha Aerospace (012450.KS) surged more than 8%, while Samsung C&T (028260.KS) rose 5%. On Wall Street overnight, consumer companies seen as offering downside protection posted standout gains.
Hanwha Aerospace traded at 892,000 won, up 8.25% from the previous session, as of 9:42 a.m. on the 16th, according to the Korea Exchange. Samsung C&T changed hands at 283,000 won, a gain of 5.79%. Other sharp risers included Hyundai Motor (005380.KS) at 5.08%, Samsung Biologics (207940.KS) at 4.33%, Samsung Life Insurance (032830.KS) at 4.17%, Celltrion (068270.KS) at 4.94%, Kia (000270.KS) at 4.06% and Hyundai Mobis (012330.KS) at 5.63%. The market's two largest stocks, Samsung Electronics (005930.KS) and SK hynix (000660.KS), rose 2.14% and 1.82%, respectively, a comparatively modest climb.
None of these companies is directly tied to the AI industry, where doubts about the growth outlook have been mounting. That is seen as the reason they are rebounding more steeply than companies within the AI value chain. The same pattern played out on Wall Street overnight, where AI-related names continued to weaken while companies with steadier earnings advanced. As money rotated out of technology into other sectors, consumer stocks such as Nike, up 5.21%, and Home Depot, up 4.31%, drove the indexes higher.
South Korea's stock market has fallen 18.8% this month, a steeper drop than Japan's 3.5% decline or Taiwan's 2.0%. Measured against final earnings through the second quarter of this year, the KOSPI's price-to-earnings ratio has slipped to about 8 times. That is comparable to levels seen during macroeconomic crises such as the 2003 credit card debt crisis, the 2008 global financial crisis and the 2020 COVID-19 pandemic.
Against that backdrop, brokerages are cautiously raising the possibility of a W-shaped rebound, in which the market recovers after passing through a trough. In a report released the same day, KB Securities said the recent plunge in the KOSPI was "the result of excessive concern about an economic downturn and falling profits being priced in early," adding that "entering a valuation comparable to the financial crisis can be read as the process of forming a second bottom for a W-shaped rebound, following the low on July 29."
