International oil prices, US long-term interest rates, and the won/dollar exchange rate acted as key pressure variables for the Korean stock market this week. As the AI infrastructure rotation reignited, the resilience of major domestic semiconductor stocks was once again put to the test. [Photo=Hanmiilbo Composite]

The starting point for the Korean stock market this week was not the New York indices, but oil prices and interest rates.

The won/dollar exchange rate hovering around 1500 won tested the sustainability of foreign investor inflows.

The rotation in AI infrastructure once again provided direction for major domestic semiconductor stocks.

The theme of this week's trend is 'Reconfirming Semiconductors Amidst Rough Seas'.

In the third week of May, the Korean stock market reacted more sensitively to oil prices and long-term interest rates than to the fluctuations of the US stock market.

The volatility of the three major New York indices was a mere external variable, but the surge in international oil prices and the rise in US long-term interest rates that lay behind it acted as direct pressures on the Korean stock market.

Rising oil prices increase inflation concerns, and rising interest rates increase the burden of valuing growth stocks and semiconductor stocks. On top of this, with the won/dollar exchange rate remaining around 1500 won, the intensity of foreign capital inflows into the domestic stock market was also put to the test.

There is one question for this week's Money Radar.

"Can the Korean stock market withstand the pressure of high oil prices, high interest rates, and high exchange rates, with semiconductors at its core?"

The market sentiment at the beginning of the week was uneasy.

WTI crude oil surpassed $100 per barrel, and the US 10-year Treasury yield rose to around 4.6%. The US 30-year Treasury yield also exceeded 5%, increasing the burden of long-term interest rates. This directly led to profit-taking in technology and semiconductor stocks.

For the Korean market, more important than the adjustment in US tech stocks itself was how this adjustment would affect major domestic semiconductor stocks like Samsung Electronics and SK Hynix.

However, the trend shifted as the week progressed.

As expectations for US-Iran negotiations grew, WTI fell to the $96 range, and the US 10-year yield stabilized around 4.57%. With the pressure from both oil prices and interest rates easing simultaneously, risk appetite revived.

In this process, EWY, an exchange-traded fund tracking Korea, showed a stronger rebound than EEM, which tracks emerging markets as a whole.

This is interpreted as a signal that global capital is once again viewing the Korean stock market not as a mere emerging market asset, but as a market sensitive to AI infrastructure and the memory semiconductor cycle.

Three structural aspects were confirmed in this week's market.

First, oil prices swayed the direction of interest rates.

The rise in oil prices imposes two burdens on the Korean stock market. One is the burden on import prices and corporate costs, and the other is the burden on foreign investor inflows through rising US interest rates.

When oil prices exceed $100, the Federal Reserve's monetary policy vigilance increases, and when US interest rates rise, pressure on the won to weaken also increases. The Korean stock market is structured to bear this dual burden.

Second, interest rates tested the valuation of semiconductor stocks.

Semiconductors are both cyclical stocks and have the characteristics of AI growth stocks. When US long-term interest rates rise rapidly, the present value of future earnings can decrease.

However, this adjustment was closer to a temporary correction caused by the speed of interest rate hikes, rather than a signal that AI infrastructure demand itself had faltered. In fact, memory and storage-related stocks quickly recovered as oil prices and interest rates stabilized.

Third, the Korean stock market saw a conflict between exchange rate pressure and semiconductor expectations.

The won/dollar exchange rate remaining around 1500 won is a burden for foreign investors' spot purchases. However, the rebound of EWY and Kospi 200 night futures in the latter half of the week showed that expectations for improved semiconductor earnings are still alive.

Ultimately, the key for the Korean stock market going forward lies in how much semiconductor performance expectations can offset the exchange rate burden.

In conclusion, this week was not about confirming an entry into a bear market, but a week to reconfirm the resilience of the semiconductor-centric market amidst the rough seas of high oil prices, high interest rates, and high exchange rates. It was not a market where the entire index rose broadly.

However, the trend of AI infrastructure rotation expanding to memory, storage, and power equipment left important clues for the domestic stock market.

Next week's key points to watch are threefold.

First, whether WTI will rise above $100 again.

Second, whether the US 10-year Treasury yield will re-ascend above 4.6%.

Third, whether the strength of EWY will translate into actual net purchases by foreign investors in the Korean spot market and a strong performance for Samsung Electronics and SK Hynix.

※ This article is for reference analysis to help understand market trends and is not an investment recommendation. Actual markets and stock prices may vary depending on oil prices, interest rates, exchange rates, corporate earnings, and foreign investor inflows.