Until the United States starts lowering interest rates, it's hard to know if things are getting worse there. However, once they do lower rates, negative events tend to occur. Interest rates are expected to drop this September. We humans often arrogantly believe we can predict everything, but it seems that just before a problem arises, everything looks very bright. Today, we have with us Mr. Yoon Ji-ho, the head of LS Securities. Welcome. 

Hello, it's been a while since we last met. 

Yes, you are the representative, but not the CEO, right? 

No, I'm the head of the retail division. 

Well, it’s just how it goes. 

These days, the stock market is quite volatile, and it seems like the U.S. stock market has risen significantly. The current unstable fluctuations are quite concerning. There are many discussions about whether the Korean stock market should take action or take a break. What are your thoughts on this? 

From the perspective of the retail division, I would say that stocks...

I want to tell you to work hard, but I often have something to say when I meet general recommendations these days. This year, the market has seemed very easy for some people, and for others, it has been frustrating, wondering why things aren't going well. So, if you have had decent results in this year's market, it might be okay to keep working hard. This is because the stock market is currently revolving around stocks with valid reasons. However, if your performance has not been good so far, I don't think the remaining second half of the year will be easy. This is because the macro issues, especially those related to the U.S., do not seem very favorable compared to the first half of the year. I wanted to mention this perspective regarding the U.S.

Even if we like it, we can't get up well. If we do business in the U.S., we tend to get sick, so there are still some markets left like this. Those who had good first-half results are likely to do well in the exams going forward, but for those who performed poorly in the first half, it seems that the problems will become more difficult. In such cases, the exam questions might not be easy to handle. However, the reality is that those who are not doing well tend to work harder to improve, but often end up struggling even more. 

I used to mainly work in corporate sales, and it's been a while since I met with general investors. What I've realized is that when there are many easy problems, solving them can lead to significant earnings. Most people find it easier when the difficulty level of the problems is low. So, the stock prices are quite stable, and the economy is just okay, along with the companies.

When the performance has worsened, for example, let's take Heinz. We keep talking about Heinz's performance day after day, but the most attractive investment opportunity in Heinz was actually when it was in the red, right? There were even talks about it going bankrupt. It wasn't bankrupt, but it was in the red, and the same goes for HD Hyundai Heavy Industries when it was also in the red; that was an attractive time to invest. Now, it is making a profit. Many people might think, Why is this happening when the company's situation is improving? Ultimately, it's due to the cyclical nature of corporate investments. So today, my main topic is this: We cannot predict the weather day by day, but we can understand the seasons. So, are we currently in a season for sowing seeds? I'm not trying to make a specific point about sowing seeds, but perhaps the time to sow seeds for SK Hynix was in the past.

I think it was around 70,000 won, and the 70,000 won range seemed to be the best. I actually bought it back then, and I remember that, which is why I'm mentioning it. At that time, I was on this broadcast talking about how good semiconductors were. But now, it's fluctuating around 200,000 won, and it could potentially reach 300,000 won in the future. However, right now, it might be a time for calculations, or perhaps a time for sowing seeds. I brought this topic with me. 

So, let's think about when the right time to sow seeds might be. In this case, we introduce the concept of valuation. Based on the P/B ratio, I believe that after 2019, if it breaks below 0.9, that would have been a good time to buy. I'm not entirely sure, but when it broke 0.9, if you had sown seeds then, there were times when it rose significantly, even reaching around 1.3. But right now, it's quite different.

It's unfortunate that in our country, the white belly fish has only recently come out, and it seems to be shaking. In fact, it could potentially drop to 1.1, but if we had bought here, it would have been very advantageous. Conversely, now, no one thinks that is a possibility, but there is no chance of a downward trend. Many people feel this way. There is a concern that an unexpected event could cause the market to decline, and currently, the PBR is around 0.9, approximately 2,540. It's not as simple as it sounds; that's the index. If it were to drop to 0.9 again, it would be very attractive. However, I don't think it will go that way just yet; it's a running situation. The reason I don't think there will be a sharp decline is due to the next chart. It shows the South Korean stock market and the global economic leading indicators. The content is quite simple: when the global economy improves, countries like South Korea, which have an open economy and rely heavily on exports, are closely linked to the global economy. However, this is on the rise.

During the period when the leading economic index is rising, stock prices tend not to drop sharply. Right now, they are indeed going up. The concern is that if we hit a peak and start to decline, stock prices can collapse dramatically due to certain shocks. If we look at the years 2012 and 2014, there were instances where prices seemed to rise but then just moved sideways. I actually think this might happen again. I keep mentioning this because I believe that while the downside appears somewhat limited, any market correction is unlikely to exceed 10%. The economic leading indicators suggest that this is not appropriate because the leading indicators themselves indicate that if it’s delayed, we might see a downturn in the first quarter of next year, or possibly as early as the fourth quarter of this year. If we consider the leading index and some other leading indicators, there is a possibility of some turbulence in the second half of this year, so if we believe it will decline...

However, if it bends like this, if it descends gently like in April 2014, there shouldn't be any problems. But it could also drop suddenly; we can't know for sure. What can I do about this? So, what's clear is that this also shows that it's not the time to sow seeds. Here, seeds were sown, right? So, this is also related to the increase in exports, and since it's a similar picture, I will skip that part. Anyway, right now, we have no choice but to focus on exports because the leading indicators have improved. And one more thing, among the questions you asked me earlier, you mentioned why the market is so solid. I said yesterday that if Samsung Electronics reports good results, it will likely rise significantly. The market is indeed in a dilemma, but honestly, the results are much better than I originally thought.

That's right. I said it's the best ever, so let me show you. If you look at this chart, the consensus revenue at the end of last year was 260 trillion won. Now, it has increased to 274 trillion won. Then, we entered 2021, and the conclusion is that it performed even better. As you know, there are times when stock prices peak, and in 2022, they collapsed. When was there a similar period in the past? If we look back, in 2011, it performed better than expected at the beginning, but then it collapsed in 2012. What I want to emphasize is that it performed well, so stock prices should have risen more. However, if we look deeper into the details, there seems to be an excessive preference for certain stocks, which is somewhat skewed. For example, sectors like semiconductors, automobiles, banks, and utilities are the only ones generating profits.

It is true that the stock prices are somewhat disappointing. This ultimately leads to the controversy of peak-out, right? But peak-out should be more than just a peak-out; it should actually peak out. The argument that we are already at peak-out is certainly valid. A representative piece of data that I hope you pay close attention to is the Roe, which is based on the 12-month expected earnings. The gap between Roe and PBR is significant. If PBR had risen to this extent, then Roe should have increased accordingly, right? But it hasn't really done so. What does this mean? It seems that the market is skeptical. In other words, the corporate profits in our country are ultimately tied to the global economy. Perhaps they are concerned that consumer spending in the U.S. might be weaker than expected. Well, that could be a possibility. Anyway, this is just my personal thought.

There is a possibility, but in any case, the second half of the year has already reflected the slowdown. Just a moment ago, I thought that profits would not come out, and by the end of this year or early next year, the key indicators will drop. Without this mindset, the current ROE compared to PB is too low. I haven't expressed an optimistic view about the market for a long time, but based on the data revealed so far, it seems that it should actually go up. I thought it would be a better market. Given that profits have increased this much, it is indeed surprising. One of the reasons for this rise is the improvement in the situation. Now, we need to discuss this in more detail. While profits have improved, it seems that there is definitely a change in our country regarding shareholder value. There has been an excessive undervaluation of the dairy industry.

When you look closely, bank stocks are representative, right? Long-standing banks are not frustrating. Bank stocks are quite solidly supporting the market. This picture shows that, unfortunately, the total dividend amount for this year is not included, but if you look closely, the total dividend amount has significantly increased since 2020. Ah, I see. However, I think placing a bar here could lead to some misunderstanding, as it seems that at least 15% or more has increased compared to 2023 based on the most recent data. Yes, at the current point in time, there has definitely been a change in the denominator. So, we think that the ROE will reflect an increase in stock prices, but in fact, a very important idea emerges in sector strategy. When we choose stocks, there are dividend growth stocks. So, there are dividend stocks and dividend growth stocks, right? Dividend stocks are...

From a simple perspective, dividend rankings are good, but in reality, they are quite lacking. What about dividend growth? Right now, dividends are being paid, but as stock prices grow and profits increase, there are companies where dividends grow alongside them. For example, a representative case is Lino Industry. Among the large-cap stocks in our country, Hyundai and Kia Motors are probably the most symbolic stocks. There’s another point: for dividend growth to happen, profits need to be consistently good; it can't be a situation where one year is good and the next year is bad. One company that comes to mind is perhaps the oldest structural industry in our country, which is the banking sector. So, moving beyond just being defensive stocks, the concept of dividend growth has significantly supported this market. When the discussion about value-up first started, people thought it was just because of the elections, but looking at people's sentiments, we can see parallels with Japan's case.

We have raised the bar, and our expectations have increased. Companies seem to be responding to this demand. The representatives have also contributed, and many voices in Yeouido, perhaps a bit exaggeratedly, have strongly advocated for the interests of ordinary shareholders. The important thing is that you mentioned Japan; we have seen it. It's a mirroring effect. Since 2014, Japan has started to reform its value-up system, and now, ten years later, we can see that their stock prices have improved significantly. When Warren Buffett invested in Japanese companies, many wondered what he was doing; it was hard to understand at the time. Do you remember that? In fact, from that moment, Buffett placed great importance on shareholder value. So, from my perspective, this aspect is crucial.

It's positive, but then let's go back to why Ji-soo is in this state despite everything being so good. Why do we have to be at the bottom globally? When you look at stock prices, it raises another question. Some people might think that if the U.S. takes a break, we will rise. On the other hand, I believe that if the U.S. takes a break, we will rest even more. The reason for this will be explained in the next part. This is about the past; I entered Yeouido in 1994 and I try to maintain the memories from that time. Since I entered the securities industry in 1994, I have been in this field for a while now. Initially, I did well, but I realized that whenever the U.S. lowered interest rates, problems arose. In 1994 and 1995, during that time, the stock prices didn't drop even after the U.S. lowered interest rates, and the U.S. military was holding on.

이때 우리나라가 무너졌던 사실을 이야기하고 있습니다. 사실, 1994년에 금리가 인상되었고, 그 다음 1995년에 금리가 내릴 때 우리 증시가 무너졌습니다. 2008년 금융위기 때도 금리가 내릴 때 우리 주식 시장은 무너졌습니다. 금리 인상 사이클이 끝나고 금리를 내리기 시작하면서 증시가 무너졌던 것입니다. 무너지지 않았다는 것은 금리 인하할 때 무너졌다는 것입니다. 미국 이야기를 하지 말고 우리 이야기를 하자고요. 그러니까, 미국은 문제 없었다고 하지만 사실 이때 아시아 외환위기까지 왔습니다. 그렇다면 여기서 우리가 근본적인 질문을 던지는 것입니다. 미국이 금리를 내리기 시작할 것입니다. 드디어. 이전에도 한번 여기와서 동일한 이야기를 반복했기 때문에 어떤 분들은 저 아저씨 왜 자꾸만 이상한 이야기를 하냐 하실 수도 있지만, 이건...

I don't really know if the situation in the U.S. is getting worse until the empirical judgment starts lowering interest rates. However, once the rates are lowered, negative events tend to occur. When I say this, people might think I'm being irresponsible. Today, I feel comfortable enough to share this with you, and I’m being completely honest. Even now, economic slowdown indicators are showing up in the data, and I keep discussing it. It’s frustrating because, even if I talk about it like a cliché, I’m not in a research center. If I mention something like cost egg, it’s just a reference I’ve included. This is a chart I often show, and I remember it well because I participated in a discussion around this time. It was when there were talks about the U.S. economy collapsing and the stock market crashing. At that time, I was revisiting my thoughts on the situation.

I noticed that they were talking about a key issue. At that time, they mentioned that the inversion of short-term and long-term interest rates is not a problem. What happens when there is an inversion? The moment the inversion occurs, stock prices rise significantly. When the inversion is resolved, stock prices tend to drop. So, why does this happen? There are various reasons, but simply put, we often say that interest rates represent the supply of money while the economy represents the demand for money. Interest rates decrease when the demand for money weakens. Therefore, as we keep looking at the supply of money and interest rates, this situation arises. The point I want to make is that when it comes to the economy, the moment interest rates start to drop, short-term interest rates decrease, and the inversion of short-term and long-term rates is resolved. Then we...

Finally, the time for a real showdown has come. This September, interest rates are expected to drop, right? If it's about 25 basis points, I'm not too worried, but if they drop by 50, that's concerning. We still don't know how much they will actually decrease. But that would be unpleasant. From that point on, short-term interest rates will likely go down, while long-term rates may not decrease as much. Short-term rates are fixed rates, while long-term rates are market rates. It seems like the supply and demand for government bonds and the economy won't allow long-term rates to drop easily. If short-term rates go down, it would require the U.S. economic indicators to worsen a bit. The moment I say that, someone will ask, What are you talking about? Do you know what the U.S. GDP is? That question will come up, right? Is it 2.3 or 2.4? Oh, it was 2.8 or 2.7, and I think it came out at 0.1 more. Let me mention something about this. Today, I'm just...

These days, I don't broadcast often, so I just take it easy. However, the City Surprise Index, which is supposed to reflect expectations, is showing worse results than anticipated, indicating a negative trend. Many of you might have heard about this. This graph is something I really want to show you; it's an old graph I used before. It illustrates the economic recession. Before the recession, the economy is doing well in the U.S., and the expectations are always positive. Suddenly, the economy enters a recession. I saw this happen in 2000, and it was the same with the Greenspan era; in 2002, people wondered why they didn't see it coming. The truth is, it’s something that can only be understood in hindsight. What I want to emphasize is that we humans tend to be arrogant, thinking we can predict everything, but...

Before a problem arises, it seems like everything is at its brightest. The Federal Reserve keeps saying that it's data-dependent. They made an important statement here. For example, before we move on, if you look closely, the U.S. visa performance has been released, and it's very important because it determines consumer spending in the U.S. During the earnings call, they mentioned that consumption is deteriorating starting from those who have no money. That's right; it's the lower-income group that is struggling first. In our country, it's similar. If you look at our situation, wealthy people are not affected much by high interest rates, right? It's the people with no money who start to feel the pressure first, like small business owners. This is where things are breaking down, and gradually, we are seeing the effects rise. Recently, incidents like the WemaP and TMON situations are just the beginning of all these issues.

Happy Money, there are things like that. If you look closely, the credit situation is stable, and there are no problems yet. However, issues like Triple C are arising. So, the weaker areas are starting to shake. The U.S. is shaking. The delinquency rate in the U.S. is gradually increasing. It's not a major problem, but if you look closely, the U.S. NFI—this is a survey conducted by scholars on small business optimism—shows that small business owners and self-employed individuals are already in a recession. We are at the bottom of the market. The shaded area indicates an NBER recession. As you know, we only find out after some time. There are two main indicators of the economy: one is when GDP continues to show negative growth, which is considered a technical recession. An economist named Richard, who founded the NBER, has discussed this.

했던 전미 경제 연구소에서 지나고 나서 이게 경기 진짜였어. 그때가 얘기한단 말이에요. 근데 요거는 항상 언제 들어왔냐, NF 소기 낙가 진수 여기 오면 시작을 했어요. 저기가 왜 보여 드리냐면 금리를 내리지 않을 수가 없는 거예요. 미국도 지금, 그러니까 지금 금리를 내린 거는 여기서 내린 게 아니라 여기서 내리고 있다는 거죠. 이거는 쉽게 말해서 물가가 잡혀서 그냥 금리 내리는 게 아니라 경기를 어떻게 보면 방어하기 위해서 하는 거예요. 사람들은 처음에 다 보험성 인나라 하는데 그거 하는 거예요. 그거는 이론의 여지가 없지 않나요?

좀 더 기다리자. 미 경기 침체는 예고 없이 시작된다. / 반도체에 대한 고민은?ㅣLS증권 리테일 사업부 대표 윤지호

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