[R&E] KOSPI Hits All-Time High, 'AI Substrate' Upcycle Fueled by 111 Trillion Won Liquidity

[R&E: Research & Epoch]
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Market Overview: Key Indicators and Trends

The U.S. stock market experienced a tech-heavy correction yesterday, driven by a combination of wariness over short-term spikes, profit-taking, and concerns about intensifying competition in the software sector. In particular, following Anthropic's announcement of a new AI tool, possibilities of damage to the business models of software companies were raised, causing the NASDAQ index to drop by 1.43% and increasing market volatility.

On the other hand, the domestic stock market staged a massive rebound on the previous trading day, renewing the KOSPI index's all-time high at 5,288.08pt. This was the result of the inflow of bargain hunting following the previous day's plunge, a strong U.S. ISM manufacturing index, and expectations for an improvement in the domestic semiconductor industry acting simultaneously. Foreigners and institutions led the surge by net buying 704.3 billion won and 2.1703 trillion won, respectively. In particular, semiconductor large-cap Samsung Electronics (KS: 005930) posted a daily gain of 11.4%, marking its largest increase in 17 years.

As South Korea's consumer price inflation rate for January hit a 5-month low of 2.0%, reinforcing expectations for interest rate stabilization, customer deposits, which are standby funds of retail investors, renewed an all-time high at 111 trillion won, proving an environment of abundant liquidity. Although there is short-term profit-taking pressure in today's market due to the steep rise, it is a time when a stock-selective alpha strategy focusing on strong liquidity and structural growth sectors remains valid.

Key Industry Issues and Insights

The global IT industry has entered a full-fledged long-term investment cycle for building AI infrastructure. In the high value-added substrate market, a core component, Japan's Ibiden (TYO: 4062) announced a large-scale capacity expansion plan totaling 500 billion yen over the next three years, which is a strong signal supporting the possibility of a structural industry improvement for AI ABF substrates. Among domestic companies, ISU Petasys (KS: 007660) confirmed the application of Sequential MLB for next-generation accelerators, with its average selling price expected to rise 2 to 3 times compared to previous levels, thereby strengthening its competitive advantage in the high value-added substrate market. As the memory industry cycle transitions beyond price increases into a phase of expanding capital expenditures, the combined capital expenditure of Samsung Electronics (KS: 005930) and SK hynix (KS: 000660) for 2026 is expected to be revised upward to 105 trillion won, reflecting the possibility of intensifying supply shortages in DRAM and NAND.

The secondary battery materials industry is seeing rising expectations for an earnings recovery due to a sharp rebound in metal prices. As of January 2026 compared to August 2025, lithium prices have surged by 78% and cobalt by 69%; accordingly, the selling price of cathode materials is analyzed to rise by about 17% during the second quarter. This is a key variable that heightens the intensity of earnings improvement for companies that suffered large inventory valuation losses, such as L&F (KS: 066970).

In the mobility sector, due to the impact of revised electric vehicle strategies by automaker clients, Hanon Systems (KS: 018880) recognized an impairment loss of 196.1 billion won in its Q4 net income, but its operating profit successfully turned to a surplus thanks to favorable exchange rates and the reflection of cost compensation subsidies. The company demonstrates a clear will to improve internal stability, offering an annual operating profit margin guidance of 4% or more for 2026. Furthermore, Lotte Energy Materials (KS: 020150) is accelerating portfolio diversification by expanding its Iksan production capacity to 16,000 tons by 2027 to respond to the supply of high value-added circuit foil (HVLP), which is emerging as a bottleneck factor for AI substrates, despite poor performance in its main battery foil business.

Market Signals

• Surge in Memory Capital Expenditure: Fueled by structural growth expectations in the memory industry, the combined capital expenditure of Samsung Electronics (KS: 005930) and SK hynix (KS: 000660) for 2026 is expected to be revised upward to 105 trillion won, strengthening the order momentum for materials, parts, and equipment (MPE) companies.

• Expansion of High Value-Added Substrates: Based on AI server demand, Japan's Ibiden (TYO: 4062) is executing a large-scale capacity expansion of 500 billion yen over the next three years, expanding its AI ABF substrate production capacity by approximately 2.5 times compared to the current level.

• Rebound in Metal Prices: Driven by global mineral security issues and the stabilization of speculative selling, copper prices surged by 4.5% from the previous day, and lithium carbonate futures prices also rebounded by 11.8%, raising expectations for selling price recoveries among secondary battery materials companies.

Epoch View: Investment Implications

The current market is an environment where structural growth momentum and abundant liquidity are combined, but it is a phase where a selective approach based on individual corporate earnings has become even more important. The long-term growth of AI and advanced technologies is already materializing into global capital expenditure plans, and supply chain companies across the entire AI infrastructure, such as high-performance substrates and HBM, have firmly established themselves as key beneficiaries. Although short-term profit-taking risks exist, the upward trend in earnings estimates for the semiconductor sector is expected to continue from a long-term perspective, so attention should be paid to competitive materials, parts, and equipment (MPE) companies.

Among traditional industries, companies with clear timing for earnings rebounds are promising. Hotel Shilla (KS: 008770) recorded a Q4 deficit, but the substantial turnaround to a surplus in its duty-free division is expected to go into full swing starting in the second quarter of 2026. Furthermore, entering an upward cycle in metal prices is a key variable that determines the extent of earnings improvements for secondary battery materials companies from the second quarter onwards. In particular, strategic companies that simultaneously pursue benefits from AI growth by expanding their business areas from battery foil to circuit foil are certain to gain a relative advantage. Macroscopically, as an increase in U.S. tax refunds (the OBBBA effect) will likely boost Americans' disposable income starting in mid-to-late February and improve investment sentiment for consumer discretionary goods, the flow of related sectors should be closely monitored.

This content was generated by News Epoch's proprietary AI algorithm, which tracks and analyzes public data from the research centers of major domestic securities firms in real time.
Please note that this is an objective summary based on collected data, and it is not a solicitation or recommendation to invest in any specific stock.