On one side of the scale lies AI semiconductor performance and growth expectations; on the other, market supply and demand flows represented by foreign selling, retail buying, and pension fund rebalancing. The market this week was a battleground where strong earnings collided with poor supply and demand dynamics. [Photo = Hanmi Ilbo Graphics]

To summarize the market for the fourth week of June in one sentence: The semiconductor euphoria is not over. However, the days of buying at any price are.

While Micron’s earnings reaffirmed the strength of the AI memory cycle, the volatility in the Korean stock market demonstrated the risks that arise when expectations are too high and too concentrated on a narrow range of stocks.

The core theme of last week's "Money Insight" was the duality of a market where both risk assets and safe-haven assets move in tandem.

Capital has not abandoned risk assets, but rather it is distinguishing between risks that can beat interest rates and those that cannot. This distinction became even clearer this week.

While the market continued to embrace the growth risks associated with AI semiconductors, it reacted more sensitively to risks involving excessive leverage and supply-demand imbalances.

This week's insight is titled 'The Collision of Good Earnings and Bad Supply/Demand.'

While the industry's trajectory remains strong, the movement of funds has become much more turbulent.

The strength of AI semiconductors rests on two conditions.

First is the scaling race. Hyperscalers cannot stop competing for computational resources and chip procurement if they are to stay ahead in the AI performance race.

Second is the expansion of essential AI use cases. As fields where it becomes difficult to maintain productivity and competitiveness without AI—such as coding—continue to grow, semiconductor demand creates new layers.

Micron's earnings this week bolstered the argument that these two conditions remain intact. The pricing power of memory suppliers was confirmed, and concerns over supply gluts have, for now, receded. Therefore, the semiconductor rally cannot be dismissed as a mere bubble.

The issue is not the existence of demand, but the price. The market is no longer asking, "Is AI semiconductor demand necessary?" but rather, "Can the demand sustain itself at these prices?"

The Korean stock market reacted more sensitively to this question because index and supply-demand dynamics were overly concentrated in Samsung Electronics and SK Hynix.

When foreign selling occurred, the entire index swayed, and when retail and ETF-related capital stepped in to absorb it, the market rebounded sharply. Added to this was the overheating of credit-based financing, which widened both the downside and the rebound.

Ultimately, the Korean stock market this week was a landscape where supply-demand structures exerted more influence than corporate value.

The National Pension Service (NPS) rebalancing should be viewed in the same context.

In the short term, it represents a burden of sell-side pressure. However, in the long term, it may be an adjustment of weightings to reactivate the safety net. Pension funds are structured to divest when the market rises and add holdings when it falls.

The issue now is not the selling itself, but what kind of shock pension selling might trigger in a situation where foreign selling and leveraged retail buying are both escalating.

The question for this week is: "Can good earnings overcome bad supply and demand?"

The answer is conditional. Good earnings support long-term trends. However, in the short-term market, supply and demand move faster than earnings.

No matter how strong Micron’s results were, if foreign selling, credit overheating, and concerns over pension rebalancing overlap, the Korean market could fluctuate again. Conversely, if foreign selling subsides, retail buying shifts toward cash-based investment, and semiconductor earnings estimates are revised upward, this week's sharp decline could be a rite of passage for a post-adjustment rebound.

The lesson from this week's market is simple: Even a strong industry can falter when it meets poor supply and demand dynamics.

Strong earnings also amplify volatility when built on excessive leverage. The semiconductor euphoria is not over yet. But the market has now begun to ask tougher questions of investors who believe in that euphoria.

The question is: "Are profits continuing to grow, and is it worth buying those profits at the current price?"

The one-sentence conclusion is: "Semiconductors are alive, but supply and demand are overheated."

There are five checkpoints for next week.

First, we must confirm whether domestic semiconductor earnings estimates are upgraded following the positive surprise from Micron.

Second, we must watch if foreign spot selling comes to a halt.

Third, we must assess whether the National Pension Service’s rebalancing manifests as actual selling pressure in the market.

Fourth, we must verify if concerns regarding credit-based financing balances and forced liquidations are easing.

Fifth, if the USD/KRW exchange rate does not stabilize, the recovery of foreign supply and demand may be limited.

※ This material is for informational purposes only and summarizes market trends; it is not a recommendation to buy or sell specific financial products.