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Korea Exchange (KRX). (Photo courtesy of Korea Exchange) |
[Alpha Biz= Paul Lee] The sharp decline in Korea’s stock market on Nov. 21—driven by rising concerns over an AI bubble—should be viewed as a market correction rather than the end of the bull cycle, according to Kang Dae-seung, analyst at SK Securities.
Kang said the sudden resurgence of bubble worries stemmed from growing uncertainty over a potential U.S. rate cut in December, noting that the implied probability of a December pause fell to around 60% after comments from the New York Fed President.
Despite bubble concerns, ample liquidity from accommodative monetary policy remains the strongest support for the market, Kang noted. If liquidity tightens, the AI investment cycle—which the market currently relies on—could weaken.
Kang also highlighted risks: few AI companies generate meaningful profits, funding failures (as seen in the Robin AI case) can quickly escalate into survival threats, and AI infrastructure faces rising costs due to tariffs, higher chip prices, and power constraints.
However, he stressed that liquidity supply has not stopped, and thus it is premature to declare the bull market over. Even if the Fed holds rates in December, a full-rate-hike reversal is unlikely while global economies—including Korea, Japan, and Germany—plan large-scale fiscal spending next year.
If the U.S. November CPI (Dec. 18 release) comes in lower than expected, expectations for renewed U.S. rate cuts could revive, supporting another market rebound.
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
