Yes, the weather has gotten quite chilly, and I'm back again as a hip-hop rapper. Let's get started today. With the long holiday weekend, every day feels a bit like a Monday or a Friday. Is it just me? Oh, really? That Monday felt incredibly long. I also think this Wednesday is going to be quite long as well. Anyway, despite the discomfort, the U.S. market continues to be open, so I feel that those investing in the U.S. might be feeling a bit uneasy. Speaking of which, it seems like many people tend to keep checking the market even while taking a break. Now, let's take a look at the top ten overseas stocks in terms of net purchases. The first place was held by Shud, which is a representative dividend stock in the U.S.

There are growth ETFs that account for 6.3%. The first is a semiconductor three times inverse leverage ETF, which has a weight of 5.8%. In third place is SQQQ, a leverage ETF that invests inversely three times in the NASDAQ index, with a weight of 4.2%. Fourth is TMF, a leverage ETF that invests three times in U.S. long-term bonds with maturities of 20 years or more, also with a weight of 4.2%. Fifth is VO, a Vanguard ETF that tracks the S&P 500 index, with a weight of 3.8%. Sixth is FNGG, a two times leverage ETF focused on U.S. technology growth stocks, which has a weight of 3.5%. Seventh is a TV ETF that invests in the U.S. housing construction industry, with a weight of 2.6%. Eighth is MicroStrategy, which has a weight of 2.6%. Ninth is Meta, with a weight of 2.5%. Tenth is Micro Technology, which saw a surge after last week's earnings announcement, also with a weight of 2.5%. The weights are very well diversified.

I feel that there are many stocks rising, and SQQQ is still ranked very high. I don't know much about other stocks, but there are indeed a lot of triple leverage options. If you look at SQQQ, I feel a bit uncomfortable with TMF. Moreover, this is somewhat different from what I was thinking, which makes me a bit uneasy. However, the market dropped significantly yesterday, so short-term investments in SOXS and SQQQ likely made a decent profit. I believe that individual investors in Korea are quite good at short-term trading, so if you are trading short-term, I hope you can secure some good profits. What I do is not so much about discussing short-term directional trends but rather talking about how to invest in the U.S. market in the long term. In that context, whether it's SCHD or BO...

I really like the idea of investing in things, but I don't particularly like TMF as a product. The reason is that it leverages investments in long-term bonds, specifically those with a maturity of over 20 years, by three times. I even think that the product itself is fundamentally flawed. Trying to match short-term interest rates based on changes in interest rates is not easy. Moreover, this is a long-term bond, so every time it goes up, I feel a bit uncomfortable. Nevertheless, I believe you will manage it well, just like a bond trader. I keep trusting you all. Anyway, do well in trading; it seems quite important. Looking at the net buying rankings this time, shall we move on? Let's move on to the first question and take a look at it one by one.

Recently, the U.S. port strike, China's interest rate cuts, and the injection of money are leading to increases in oil, raw materials, and prices, which could put pressure on the U.S. to lower interest rates in November. There are also claims that this could negatively affect the U.S. stock market. Additionally, there are assertions that escalating tensions in the Middle East may also have adverse effects on the stock market. What do you think about this, Director? This is related to yesterday's closing question. 

First of all, that's a great question. To understand this issue better, we need to discuss concerns about inflation. However, it is essential to consider the extent of the short-term and long-term impacts. Let's first talk about the port strike. I brought a picture with me, and if you look at it, it says, Machines don't feed families.

Now, this is the content. As AI continues to develop, the robot industry will also advance significantly, which means that people will be needed less and less. I saw a photo showing that the number of people operating power equipment is usually not as high as one might expect; there aren't that many people involved. This makes me think about how industries are changing. Let's reflect on this: really, back in the day when people traveled using horses, and then machines came along, allowing us to use cars and other technologies, the speed of transportation increased, and we could cover much larger areas. This led to tremendous productivity gains. Currently, the AI industry and the robot industry are bringing about a major revolution for humanity, and globally, one of the most representative companies of this is Google.

Listening to the CEOs of these representative large IT companies, I can't help but feel anxious about how much this era will change in the next five years. That’s why strikes will happen. If you look at the strikes that occurred, for example, there was a writers' strike in Hollywood six months to a year ago, and there was also an actors' strike. People are increasingly worried about being replaced. But actually, you might have seen that Mr. Oh also participated in AI anchor projects, right? Well, money is running out anyway, to some extent. So what I’m saying is that the industry is changing, but the foundation isn't disappearing. Appropriate legal measures need to be taken. The important thing is whether productivity is increasing or not. When we calculate GDP, we look at how much total production is being generated.

It's about how much production we can achieve compared to the number of people. So, in my view, this aspect can be described as growing pains. In Korean, we have the term 성장통, which translates to growing pains. Because of this, we need to quickly accept these challenges and think about how we can improve. Focusing too much on the fact that prices are skyrocketing due to strikes and worrying about the problems that will arise from that seems a bit excessive to me. However, one of the questions raised here is about China's interest rates and monetary policy, as well as the rising prices of oil and raw materials. This is indeed a concerning issue for me as well. If you look at the CRB index, which includes 19 commodities, the numbers have changed over the past month.

During this time, there has been a sharp rise in prices. Now, with the news of the war, crude oil surged by 5% and then showed an increase of about 3.8%. This indicates that oil prices have surpassed $70. These developments in commodity prices are somewhat concerning. We need to consider how China's massive monetary easing will negatively impact inflation. If we take a look at China's current inflation figures, we can see that negative numbers have turned positive, with a slight increase of just 0.6%. Moreover, core inflation has even risen by only 0.3%. It's not 2%. This reflects a situation of deflation. Additionally, China is trying to prevent falling real estate prices by implementing stimulus measures to support property prices.

The possibility of prices rising again is very low. The reason for this is that the prices were already extremely high, and currently, the debt-to-disposable income ratio in Chinese households is too high, making this an unlikely scenario. Although money was injected into the economy, this has a limited effect in terms of inflation. Furthermore, from China's perspective, while it certainly has to feed a large population, it seems that in industries considered to have a competitive edge against the United States, such as emerging growth industries, productivity is quite high. For instance, in renewable energy sectors like solar power, factories like Jinko Solar or Younqi Silicon have very few employees. In this way, China actively embraces these sectors. What they desire is rapid development, but this is constrained by the socialist system.

Since it is a nation, it seems a bit inappropriate to use AI too much. However, using it to a degree that increases productivity is acceptable. Considering various factors in the context of competition with the United States, I think that China's increasing productivity itself significantly raises the possibility of inflation remaining low. 

Next, there was a fluctuation in the stock market due to Iran launching missiles. This has happened before, and after such fluctuations, the market tends to recover. Ultimately, if oil prices are greatly affected, it becomes problematic. However, as electric vehicles become more prevalent and renewable energy takes up a larger share, the demand for oil may not grow rapidly. There may be almost no growth in demand. In this case, it becomes difficult for oil prices to rise significantly from the supply and demand perspective.

So, if we look at various aspects, we can conclude that we are currently in the fourth industrial revolution, which is transitioning into the fifth industrial revolution. In this process, productivity is expected to increase very rapidly. Given this context, it would be quite unreasonable for raw material prices to surge dramatically. Therefore, there is an environment where inflation could stabilize downward, or it may not be at such a high level in the future, which will be created in the medium to long term. Thus, we need to establish investment strategies accordingly.

I believe you've grouped many questions together in your response. The second question is somewhat related: Should we invest in China right now? I suspect this question considers the stimulus measures. So, let's talk about China now.

What we are seeing this time could be a significant bounce. This is because China has been waiting for the stimulus measures coming from the United States. I remember mentioning this to you before. Now, they are holding back their last card and are currently using it. This will have a certain level of impact. 

If you look at the chart, the Shanghai Composite Index seems to be unable to break through upward. However, in the long-term view, it can still rise by at least 10% compared to the current index. The Shanghai Composite Index will also attempt to reach close to the peak from 2021. 

Additionally, the Shenzhen Composite Index is even more severe. If you look at all the indices, it seemed to break below the trend line, but it has created a double bottom and is rising. This indicates that it could reach the upper part of the trend line. Therefore, if we calculate this, the Shenzhen Composite Index is currently...

In comparison, it can increase by about 30%. However, what we have been discussing is that in the competitive landscape between the United States and China, if you think about it carefully, China is a socialist country, which makes it difficult to fully utilize open AI. The reason for this is due to national issues. The difference in computing power between the US and China, which was the same seven to eight years ago, is now 12 times greater. This indicates that the US is significantly faster. In this process, while it may be better than other countries in terms of competitiveness for a long time, it is limited in rapidly enhancing that competitiveness. Therefore, because a lot of money is being spent this time, the stock price may fluctuate significantly in the short term. However, in my view, this is about playing the last remaining card over this year, next year, and the year after. Based on that, I believe you should be able to exit well within the next one to three years.

Our country has already invested too much in China, so it's not about making more investments outright. It's about how we can exit effectively. If you look at Samsung Electronics and all the companies, they initially had a high market share, but over time, they have significantly declined in China. Now, Samsung phones hardly sell there. That's why we need to find a way to exit well. China may have its ups and downs, but looking at the net buying volume, it seems that our investors prefer short-term investments. So, short-term investments are perfectly fine in China as well. However, where should you invest? For China to survive, it needs to have competitive industries. What are those? Electric vehicles, renewable energy, electric vehicle batteries, parts, and so on. As for AI, I'm not so sure.

So, in my opinion, even if you are doing short-term investments, it would be better to focus on that aspect. Just now, you looked at me as if I were someone who engages in day trading, but that's not the case. Now that I’m with this company, many viewers seem to have a fixed idea that they should escape whenever there's a slight rise in their investments, especially since they hear from the director on YouTube that they should get out when things go up. There are many people who think they will successfully exit this time. Indeed, we discussed this on our previous broadcast. Anyway, since we’ve talked a lot about tendencies toward short-term investing, I suppose that wouldn’t be the case anymore. Alright, let’s quickly move on to the third question regarding software stocks.

Valuation is very difficult. How can we evaluate whether the price is high or not for good software stocks? This is indeed challenging for me as well, so I won't provide specific criteria. Instead, let me discuss it from a broader perspective. 

You always need to think deeply about this. If you look at South Korea, Taiwan, and China, most of South Korea and Taiwan are related to hardware manufacturing, which is significantly connected to semiconductors. China, on the other hand, is also heavily linked to manufacturing. However, when it comes to the consumer market, the scale is a bit different. Especially in the cases of South Korea and China, the proportion of consumption to GDP is not that high, unlike in the United States. Perhaps that's why, when including South Korea and China...

The competitiveness in the software sector is somewhat lacking. Therefore, what I am suggesting is that you should invest in areas where there is competitiveness. What does that mean? It means you should invest in American software companies. Yes, when you look at the big picture, you need to think this way. Now, why is the United States intimidating? It is because they continue to attack China to such an extent that it even affects the manufacturing sector, while consumption should be increasing. However, consumption cannot increase because the debt ratio of households is very high compared to disposable income. In such a situation, where does the United States focus? On India and other populous Southeast Asian countries. The economic structure is very important here. In China, consumption accounts for less than 40% of the total GDP, whereas in the United States...

If you look at the economic structure, private consumption accounts for 70%, and government consumption is about 10%, so together they exceed 80%. This means there are many industries connected to software. Therefore, software will continue to maintain its competitiveness because the consumption base is solid. Now, how about India, which is also increasing its connectivity? India is indeed closely following the United States; its consumption is around 60%, and when you add the government consumption, it reaches about 70%. It is a very important consumer market, second only to the U.S. Thus, we can enhance software connectivity by utilizing this population. In my view, it is crucial to consider where to invest overall. When it comes to U.S. software, for example, take Apple. When Apple first introduced the iPod and then transitioned to the iPhone, it gradually evolved...

In fact, it's not a company with such a long history. Of course, there were companies like McIntosh in the past, but if you think about it now, the revenue structure has changed dramatically. It's not just hardware; with the connection to software, if we look at the current sales distribution, hardware sales like the iPhone account for 70% of the total, while software sales account for 30%. However, in terms of net profit, it's a 50-50 split. So, where is the money being made? A lot of it comes from software. The surprising thing is that it has taken 20 years to establish this software revenue base. So, that's how a company like Apple has emerged. Now, regarding AI, hardware is being laid out, and Nvidia is working hard on this. Eventually, as software connects to it, new revenue structures will emerge. The question is, who will succeed in this?

Isn't it true that success comes from being in the largest market? Just like China is trying to gain an advantage in the largest consumer market with electric vehicles and renewable energy, the same applies here. The U.S. consumer market and the Indian consumer market are the largest; if you have competitiveness in these markets, isn't that what matters? So, you need to invest in American companies, particularly American software companies. However, as you mentioned, it's challenging. It's difficult because the price-to-earnings ratio is high. People think it's hard to invest during such times. In this situation, you just need to avoid the mistakes that Cathie Wood has made. What I mean is, when you look at her investments, she tends to invest in companies with very high technological capabilities. However, she invests even when the connection between that technology and the consumer market hasn't been properly established.

Strategy involves investing when that connectivity is established; in other words, when cash flow is positive, even if profits are not yet realized. Therefore, we often advise against investing in software companies that are not generating revenue yet. So, what are the sectors that are profitable? There are data mining companies that utilize data effectively, and there are many representative firms in this field. While I cannot disclose the specific stocks we invest in, I encourage you to look into these companies. Additionally, companies that enhance marketing efficiency through data utilization are extremely important. Recently, due to antitrust laws, a portion of the revenue generated by advertising from companies like McKinsey & Company could potentially shift towards small and mid-cap stocks. Although these types of stocks may seem challenging, the key point is that investments should be made in the U.S. and in companies that have started generating profits.

It is important, right? If you don't want to do that or if it's hard to find, just let the ETF manage it for you. Of course, ETFs can be a bit expensive, but I believe that diversifying your investments this way is a good strategy. Yes, I always try to keep it brief, but it seems like we've gone over time today. Yes, that's true. Lastly, please give us a quick final word. Yes, invest successfully with us. Everyone, stay strong, and we will come back with energy next week. Thank you. Thank you.

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유동원 유안타증권 상무

2019~현재) 유안타증권 글로벌자산배분본부 본부장/상무
2013~2019) 우리환화투자자문 북경리서치 센터장
2008~2011) 우리WAP헤지펀드 펀드매니저/리서치헤드
2001~2006) 솔로몬스미스바니/시티그룹 증권 상무/리서치센터장
2000~2001) 모건스탠리 증권 이사/금융업종 담당 센터장
1998~2000) CLSA 애널리스트 부장
1993~1998) 동방 페레그린 애널리스트 부장 
1993) 펜실베이니아대학 와튼스쿨 경영/재무/경제 학사 


다시 커지는 중동 리스크, 소프트웨어 종목 선별법!

다시 커지는 중동 리스크, 소프트웨어 종목 선별법!

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