[Edaily Reporter Park Sun-Yeop ] As the domestic stock market surges, led by major semiconductor stocks, and volatility increases, analysts predict that the market’s concentration on leading stocks will not end easily in July. While demand may spread to neglected sectors such as the KOSDAQ and biotech stocks in the short term, analysts suggest this is more likely a temporary reaction to excessive concentration rather than a trend reversal.
Kim Jun-young, an analyst at iM Securities, stated in a report titled “July Outlook for the Korean Stock Market” released on the 30th, “The rise in the Korean stock market from April to June was accompanied by a concentration of investment in stocks with the highest market capitalization,” adding, “While a temporary broadening of the market is possible, the concentration is likely to persist.” He noted, “Efforts to seek out other opportunities can be put on hold for now,” placing greater weight on the likelihood that the rally, led by memory-related blue-chip stocks, will continue.

Researcher Kim compared the recent market conditions to the 1999 U.S. information technology (IT) rally. At that time as well, despite rising interest rates and monetary tightening, only certain leading sectors—such as IT—continued to rise until the market eventually turned downward. He explained that currently, capital investment in artificial intelligence (AI) is flowing into data centers and power grids, pushing up real interest rates, and that rising interest rates are in turn widening the gap between companies with solid growth prospects and those without.
The concentration is also evident in earnings strength. According to the report, as of the end of June, the three-month growth rate of 12-month forward net income for the top 10 stocks by market capitalization reached approximately 90%. Looking solely at SamsungElectronics(005930)and SK hynix(000660), the growth rate rises to 99%. In contrast, the three-month growth rate of forward net income for the KOSPI, excluding the top 10 stocks by market capitalization, remained at around 11%. Researcher Kim pointed out, “Before asking whether this concentration in the stock market represents a healthy rally, we must first confirm the differentiation in earnings momentum.”
The contribution of the semiconductor sector to earnings is also overwhelming. iM Securities projected that the KOSPI’s annual operating profit will increase by approximately 315 trillion won, from 935 trillion won this year to 1,250 trillion won next year. Of this, the semiconductor sector’s contribution to the increase in operating profit is estimated at 265 trillion won. While profit growth is also expected in sectors such as trading and capital goods, secondary batteries, shipbuilding, and automobiles, the analysis suggests that the increase will be limited to between 3 trillion and 5 trillion won.
The report concluded that the KOSDAQ’s slump cannot be attributed solely to fundamental issues. This is because the trend in market capitalization for KOSPI stocks—excluding the so-called “S7” group (SamsungElectronics, SK hynix,SKSQUARE(402340),SamsungElectronics(1P)(005935),SamsungElectroMechanics(009150),Samsung Life Insurance(032830), andSAMSUNG C&T CORPORATION(028260)), which are considered the KOSPI’s leading stocks—moved in a manner similar to that of the KOSDAQ’s market capitalization. This implies that stocks not classified as leading stocks were shunned regardless of whether they were listed on the KOSPI or KOSDAQ.
Researcher Kim explained, “While the KOSPI index has surpassed 9,000 points, the KOSDAQ has returned to late January levels, and the KOSPI—excluding the S7—has returned to early February levels,” adding, “Only when the concentration on leading stocks eases will the KOSDAQ also find itself in a favorable environment from a supply-and-demand perspective.”
However, he predicted that a backlash against this concentration could emerge in July. Following the correction in early June, concentration in S7 has become extremely high, and the proportion of KOSPI 200 companies outperforming the index has fallen to around 10%. Kim explained that in the past, whenever the participation rate in rallies dropped to the 10–20% range, a backlash against such concentration has repeatedly occurred.
In this scenario, he believed that within the KOSDAQ market, a rebound centered on biotech stocks was more likely than one driven by semiconductor materials, parts, and equipment. This is because while KOSDAQ semiconductor materials, parts, and equipment tend to closely follow trends in semiconductors and IT hardware, biotech stocks have been significantly underperforming. However, he emphasized that to view a KOSDAQ rebound as a sustained rally, it would first be necessary to conclude that the AI-led rally, spearheaded by SamsungElectronics and SK hynix, has come to an end.
Regarding the debate over the peak of the AI cycle, he noted, “It is difficult to pinpoint the exact peak,” but added that, based on past patterns, opportunities still remain. The analysis suggests that both the dot-com bubble and the 2017 semiconductor cycle, rather than collapsing immediately after reaching their peaks, first experienced an initial decline, then traded sideways for about six months before entering a second decline. During this process, infrastructure companies with visible earnings actually managed to generate a second rally.
In this cycle, power infrastructure and memory were identified as candidates for a second rally. Since these are sectors that generate actual profits in the process of AI capital investment, the judgment is that their stock prices can hold up for one more round. Analyst Kim stated, “The stock prices of power infrastructure and memory companies, where profits are actually visible, are highly likely to offer an ‘opportunity to break out,’” adding, “It is safer to view this final additional rise not as a buying opportunity but as a signal to reassess.”
He identified vendor financing as a risk factor. As the details of long-term supply agreements (LTAs) surrounding AI investments become clearer, the financial health of buyers becomes more important than that of suppliers. Analyst Kim emphasized, “Vendor financing centered on OpenAI and NVIDIA also existed during the dot-com bubble,” adding, “The key point is whether companies can maintain the financial strength to fulfill their contracts.” He explained that the market’s focus is now shifting from suppliers to demand-side players.