[Edaily Reporter Park Sun-Yeop ] Forecasts indicate that the domestic stock market will continue its upward trend in the third quarter, driven primarily by corporate earnings. With increased investment in artificial intelligence (AI) and improved semiconductor earnings serving as the market’s key drivers, analysts suggest that investors’ “fear of missing out” (FOMO) could further intensify the concentration of capital in semiconductors and certain growth stocks.
Kim Byung-yeon, an analyst at NH INVESTMENT & SECURITIES, stated in a report titled “Earnings Are Key, FOMO Drives Action,” published on the 29th, “The key theme for the stock market in the third quarter is the expansion of earnings momentum,” adding, “The KOSPI is expected to follow the upward trend in earnings forecasts.”

NH INVESTMENT & SECURITIES interpreted the backdrop of the recent bull market as a combination of a “new capital expenditure cycle” and a weak U.S. dollar. The firm explained that over the past two years, global stock markets have risen as expectations of a weak dollar coincided with an expansion in capital expenditures (CAPEX) centered on AI; however, concerns regarding the sustainability of AI CAPEX and the burden of interest rates and the U.S. dollar have been growing simultaneously.
However, the firm does not expect the AI investment cycle to falter easily. Analyst Kim pointed out, “Concerns about an AI bubble should be assessed in terms of the sustainability of demand rather than the sustainability of investment itself.” While some point out that investments among Big Tech companies and cloud usage agreements could create a circular structure that inflates CAPEX, the fact that computing shortages are spreading beyond the traditional cloud oligopoly structure is interpreted as a sign that demand remains strong.
The investment burden on hyperscalers is growing. According to the report, hyperscalers are allocating most of their operating cash flow to CAPEX, and in the process, their capacity for share buybacks is shrinking. Research and development (R&D) and CAPEX also account for the majority of cash usage. This signifies that AI infrastructure investment has become the focal point of corporate cash flow.
Interest rates and the U.S. dollar remain headwinds for the stock market. NH INVESTMENT & SECURITIES believes it is highly likely that the U.S. Federal Reserve (Fed) will keep its benchmark interest rate on hold for some time. While factors such as falling oil prices, a temporary increase in employment, and a downward trend in the moving average of inflation are cited as evidence, the firm assesses that rather than expectations for rate cuts strengthening, an environment where the lower bounds of interest rates and the dollar remain constrained is likely to persist.
This is a factor that deepens polarization across sectors. Industries capable of withstanding high interest rates include AI-related manufacturing, information technology (IT), finance and insurance, and professional services—where value-added growth rates exceed interest rates. Conversely, industries whose growth rates fail to keep pace with interest rates will inevitably face greater profit pressures. Researcher Kim noted, “Ultimately, the second-quarter earnings season will reveal which sectors possess earnings momentum strong enough to outperform interest rates and which do not.”
Within the domestic stock market, analysts forecast that the so-called “K-Nifty” phenomenon will continue. Drawing a parallel to the Nifty—which refers to the market trend where a handful of large-cap stocks drive the Indian stock market—this suggests that a trend where a small number of large-cap stocks lead the index higher may continue in the Korean stock market as well. NH INVESTMENT & SECURITIES assessed, “While the driving force behind the market’s rise is a healthy rally fueled by earnings growth, investor behavior is being influenced by FOMO (fear of missing out) regarding semiconductors and certain companies.”
In particular, the FOMO-driven market is intensifying as the influence of specialized ETFs grows. The report explains that sector-specific concentration is widening as retail funds flow into ETFs such as semiconductor, semiconductor leverage, and single-stock leverage ETFs for SamsungElectronics(005930) andSK hynix(000660). The assessment is that even if foreign investors and pension funds adjust their positions, retail investors’ capital flows could continue to underpin the index’s rise.
The report also noted that the concentration in market capitalization cannot be attributed solely to mere expectations. It analyzed that “this concentration reflects not only ‘expectations’ but also ‘profits,’” adding that “the trend remains valid as long as earnings support it.” SK hynix’s rise to the top spot in market capitalization was interpreted as a result of benefits from AI and high-bandwidth memory (HBM) flowing to companies focused on memory.
The report suggested AI infrastructure and premium consumption as investment themes. Key stocks related to AI infrastructure included SamsungElectronics, SK hynix, LG Energy Solution(373220), DOOSAN ENERBILITY(034020), HyundaiMobis(012330), #LG CNS, LS ELECTRIC(010120), and HD HYUNDAI HEAVY INDUSTRIES(329180). For satellite strategies, it highlighted so-called “Korea WAVE” stocks such as HYUNDAIDEPARTMENTSTORECO.,LTD(069960), KoreanAirLines(003490), SK(034730), SamsungSecurities(016360), HANALL BIOPHARMA CO.,LTD(009420), and APR(278470).
Premium consumption was also identified as a key theme for the second half of the year. The analysis suggests that the combination of the wealth effect driven by the semiconductor sector, the weak won, and inbound demand fueled by K-culture could boost earnings outlooks for consumer sectors such as department stores and hotels. Given that the number of international visitors statistically peaks in September and October, the report explains that inbound consumption is likely to strengthen further in the second half of the year.
Analyst Kim stated, “The third quarter is a period when earnings momentum strengthens,” adding, “Investor focus will continue to gravitate toward companies reporting strong earnings, and the positive trend will extend to sectors with high earnings visibility.”