Traders at the New York Stock Exchange. With the sharp decline in artificial intelligence semiconductor stocks and sector rotation overlapping, the market has begun to recalculate the conditions for maintaining an uptrend. [File Photo, AFP=Yonhap News]

This week's theme is "Rally Validation."

Last week, Hanmi Data Lab presented three key areas to monitor in the market this week.

The first was whether the US-Iran negotiations and the Strait of Hormuz would stabilize.

The second was whether the won-dollar exchange rate would settle below 1500 won.

The third was whether the AI and semiconductor rally would spread to actual supply and demand in the Korean market.

This week, the market did not provide clear optimism for these three questions.

Stability in the Strait of Hormuz was not confirmed. While there were hopes for negotiations, reports of their suspension, concerns about blockades, and news of renewed military clashes alternated.

West Texas Intermediate (WTI) crude oil prices rose again, and the market could not completely discount Middle East risks.

Exchange rate stability also failed. The won-dollar exchange rate rose to the 1530 won range, not below 1500 won.

Even if the Korean market rebounds, foreign investor returns will be eroded without exchange rate support. The fact that the price attractiveness of the Korean stock market must be viewed in conjunction with exchange rate stability was reconfirmed.

The AI and semiconductor rally yielded the most complex answer.

Dell Technologies and Nvidia demonstrated the spread of the AI cycle. However, Broadcom and Micron Technology showed that market expectations are already very high.

The AI rally is alive, but the market is now beginning to look at the economic lifespan and funding structure of AI infrastructure rather than AI demand itself.

This week, Money Insight has one question:

“Is the market still buying growth stories, or has it started calculating the costs of growth stories?”

The answer is both.

The market is still buying AI. Nvidia's AI strategy for personal computers (PCs), Dell's AI server performance, and the strength in the software sector show that AI is expanding beyond a single theme into an industry-wide capital allocation logic.

However, at the same time, the market no longer views all AI stocks in the same way. Even with good earnings, stocks are sold if they fall short of expectations, and if capital is raised for growth investments, stock prices hold up if recognized as a long-term play.

This difference stems from the nature of capital.

Debt demands fixed interest. If collateral value wavers, risk is calculated immediately. On the other hand, equity bets on growth potential while accepting the possibility of losses.

As the lifespan of AI infrastructure assets shortens, companies heavily reliant on debt are under pressure, while big tech companies with strong cash flow and equity become relatively advantageous.

The Korean market stands in the middle of this structure.

Korean semiconductors can benefit from the AI infrastructure cycle. However, in an environment with high exchange rates, remaining Middle East risks, and increasing volatility in global semiconductor leaders, benefits alone cannot fully explain the entire market.

The next trend in the Korean market is likely to be determined simultaneously by AI benefits, exchange rate burdens, foreign investor flows, and oil price risks.

Three structures were confirmed in this week's market.

First, reassurance has not yet been fully solidified in prices. Oil and exchange rates continue to test market optimism.

Second, while the AI rally is maintaining its trend, internal selectivity is intensifying. A strategy of holding leading stocks may still be valid, but the criteria for leading stocks are becoming stricter.

Third, for the Korean market's rebound, exchange rate stability is paramount over foreign investor inflows. Foreign investors can buy Korean assets, but their incentive to stay diminishes if the exchange rate is volatile.

This week's conclusion from Money Insight is one sentence:

“The market has not yet given up on an uptrend, but it has begun to recalculate the conditions for maintaining it.”

Next week's key observation points are threefold:

First, we need to confirm whether the won-dollar exchange rate stabilizes in the 1530 won range or climbs back above the 1540 won level.

Second, we need to see if the adjustment in AI semiconductors, following the Broadcom shock, is absorbed by the strength in big tech and software.

Third, we need to check if oil prices stabilize around $90 per barrel or if renewed concerns over Hormuz risks reintroduce them as a cost variable for the Korean market.

※ This article is a market commentary to aid understanding and not investment advice. Actual market conditions and stock prices may vary depending on variables such as exchange rates, interest rates, oil prices, earnings, policies, and supply and demand.