- U.S. stock market, international oil prices, volatility depending on the degree of damage to Iranian oil refineries
- Samsung Electronics Co., Ltd.'s unfairness? Positive reports are not reflected, distortion
- Samsung Electronics' crisis is right, but inflated, stock price increase will be large until December next year
- Korea Zinc stock price surge cost, damage to shareholders intact, concerns about fundamentals damage
- Korea Zinc's aftereffects will be serious, time to hit and miss
■ Broadcast: YTN Radio FM 94.5 (09:00-10:00)
■ Host: Reporter Cho Tae-hyun
■ Air date: October 4, 2024 (Friday)
■ Dialogue: Lee Ji-hwan, CEO of i Asset
* The text below may differ from the actual broadcast content, so please check the broadcast for more accurate information.
◆ Reporter Cho Tae-hyun (hereinafter referred to as Cho Tae-hyun): Reliable information for 14 million individual investors. Useful information. Above all, it's time to talk about information that makes money. <Live Stock Institute> Unshakable comfort today. We will be with Lee Ji-hwan, CEO of Ai Asset. Welcome, CEO.
◇ Lee Jihwan, CEO of Ai Asset (hereinafter referred to as Lee Jihwan): Hello, I'm Lee Jihwan.
◆ Cho Tae-hyun: Let's start with the New York Stock Exchange overnight. How should we look at the background when the New York Stock Exchange closed weakly?
◇ Lee Ji-hwan: First of all, the indicators were not bad. I actually paid a lot of attention to the U.S. employment indicators this week. Starting with the number of job openings, ADP private employment, and yesterday's unemployment claims came out. Overall, it came out considerably better than the employment shock in July and showed a modest recovery in employment. Yesterday's jobless claims were slightly higher than expected, but the absolute figure itself was so low that it was not something to worry about employment. And here, the ISM service industry PMI index was released yesterday. As it came out a little higher than expected, the part of the economic contraction has actually become a little more gentle. However, geopolitical risks in the Middle East are expanding significantly during the day. In particular, as Israel's retaliatory attacks on Iran's missile attacks were mentioned, President Biden was pushed back a little during the day as Israel could attack Iran's oil refineries. The U.S. stock market is now showing a slight bearish trend, reflecting geopolitical risks in the Middle East without any particular issues.
◆ Cho Tae-hyun: You mentioned the employment index earlier, but actually, there are a lot of indicators, so let me explain a little bit. The Zolt report is a job search report, so it shows trends in companies' job openings and job search. ADP is an employment that comes from the private sector. Things like that. New unemployment benefits come out every week, which is some sort of trend in employment. People who are out of work will claim unemployment benefits.
◇ [Jihwan] That's right.
◆ Cho Tae-hyun: And most importantly, the non-agricultural employment report is coming out tomorrow morning in our time. The most important thing is that the unemployment rate comes out from here.
◇ Lee Ji-hwan: I think it's going to peak.
◆ Cho Tae-hyun: I hope you can refer to this trend. However, as you said, oil prices are also directly affected by the growing geopolitical risks in the Middle East. Rising oil prices will inevitably affect the financial market, right?
◇ It's bound to be crazy. In the case of yesterday, Iran's oil refining facilities, in fact, have not been directly a problem for oil-producing countries because the risks related to Israel in the Middle East have not been a problem. However, as part of Iran's refineries came out, oil prices soared yesterday, rising nearly $74 in WTI standards. At the same time, the question of whether it will be short-term or mid- to long-term effects has emerged. In fact, if there were no problems this time, oil prices were expected to ease slightly in the second half of the economy. In particular, Saudi Arabia talked about increasing production for the first time last week, so oil prices could have softened as that part was reflected. Anyway, this part of Iran and Israel is now producing more than 3 million barrels based on 1 among OPEC's oil producers. Since it is not a small amount, oil prices are likely to fluctuate in the short term, depending on how much damage Iran's refineries will be if they are attacked.
◆ Cho Tae-hyun: The U.S. seems to be trying hard to stop it somehow, but I think Netanyahu is out of control these days.
◇ Lee Ji-hwan: Actually, looking at this announcement today, I was a little puzzled because President Biden mentioned the attack on Iran's oil refineries. And this wasn't a dispute interview involving Israel, an oil refinery in Iran, but they suddenly exposed it just before they boarded a helicopter to go to the site of the port workers' strike in the southern part of the country. In a way, you can be very embarrassed about Israel. Because the U.S. president immediately mentioned that this attack can attack Iran's oil refinery even though it should be done in a surprise surprise move. Maybe the U.S. will first stop escalation, so maybe this was expressed indirectly. That's how it looks.
◆ Cho Tae-hyun: Did you pay with public pressure? But I don't know because Pentagon is a bit flustered. Anyway, let's move on. We can't cheer up the KOSPI market. I'm a little depressed. Today, the level of robustness is still forming, but if you look at it now, the US stock market has continued to be strong and then slowed down a little, and even China is rising, but our stock market is not working at all. In particular, bad news is reflected very largely and good news is reflected less, why is it so difficult?
◇ Lee Ji-hwan: Korean investors are now turning their disappointment into anger in a way.
◆ Cho Tae-hyun: It's frustrating.
◇ Lee Ji-hwan: Because the Chinese stock market jumped last week following a large stimulus package. In fact, when explaining the weakness of our stock market, we emphasized a lot of linkage with the Chinese stock market. So even if all the global stock markets rose significantly, there was an opinion that it was not good because of the Chinese stock market, but in fact, as the Chinese stock market soared, it became difficult for domestic investors to accept this part in a way. As a result, since the weakness of the domestic stock market is structurally limited to our stock market, it seems that we are now facing a situation that can go beyond great disappointment to a kind of anger, and concerns are growing even more because there is no sign that this will be resolved immediately in the short term.
◆ Cho Tae-hyun: Personally, I think it's affected by trying to touch the market artificially, but if you look at the current situation. This week is the trading day. Don't these things have an effect, too?
◇ Lee Ji-hwan: First of all, since it's probably the Pong-dang-pong-pong-pong-pong holiday, foreigners or institutions will not actively respond to the measures that can move the market. However, this is not a short-term part, but it's already been a long time since foreigners don't buy stocks in our stock market. And in a way, if this part is derived based on fundamentals, I can still accept it, but then it's hard to say that our export share or semiconductor export share is actually the worst.
◆ Cho Tae-hyun: That's right, that's right.
◇ Lee Ji-hwan: If you look at it that way, the fact that foreigners don't approach our stock market structurally reflects some special situation in our stock market, as you said earlier, and as the Chinese stock market has soared, it is difficult to say that this is linked to the Chinese stock market to some extent, so I think it's time for us to look at the structural part of why foreigners don't approach our stock market in terms of supply and demand.
◆ Cho Tae-hyun: Okay. There are a lot of implications here, and it seems that we need to look at the structural problem. One of the things you mentioned is semiconductors. Looking at these aspects of market capitalization, semiconductors are very strong to pull the overall index. The semiconductor is too weak. Especially for Samsung Electronics, Macquarie gave another harsh evaluation, why is it so... Morgan Stanley did the same last time, but why do you think it's coming out like this?
◇ Lee Ji-hwan: Actually, this is a little unfair. It's not that reports are one-sidedly bad like last time's semiconductor DRAM cycle, but in fact, after Morgan Stanley's report, and after BNP Paribas Report, there were actually a lot of positive reports. JPMorgan was at the forefront of the positive report, and last week, Goldman Sachs issued a message refuting the contents of the Morgan Stanley report one by one. Another peculiar thing is that Morgan Stanley's report itself came from the Asia-Pacific branch, and the headquarters suggested another opinion. So, the report from Morgan Stanley's headquarters is indirect, but the message from fundraising Stanley itself that the DRAM cycle is not as bad as you think. at the head office So, from an investor's point of view, this is very confusing, but these positive and negative aspects should be reflected in the stock price together, but now only the negative parts are reflected, so in fact, the supply and demand parts are distorted a lot.
◆ Cho Tae-hyun: We've also tightened this Morgan Stanley a little bit on the show, but it's standard to say that it's tightened. Anyway, it was a bit narrow and I had a bad evaluation like this.
◇ Lee Ji-hwan: But there was even a rebuttal message from Morgan Stanley's headquarters itself.
◆ Cho Tae-hyun: If you look at Micron's performance and guidance, there seem to be a lot of things to refute like this. Nevertheless, as you said, it reacted a lot in a very negative way, and Samsung Electronics' stock price has now fallen to the 61,000 won range. Then, in the short term, is it not easy to rebound?
◇ Lee Ji-hwan: It's not easy to rebound in the short term. I think Samsung Electronics' third-quarter performance announcement in October will be very important. Some say that Morgan Stanley Report did a good job with the DRAM cycle last time, but I disagree, and if you look closely, it is correct that it induced a high point in the stock price rather than the DRAM cycle. If you look at the last case, Samsung Electronics' earnings surprise came out for three consecutive quarters after Morgan Stanley Report. Then, when the real earnings shock came in the last quarter, that day was exactly the bottom of Samsung Electronics' stock price. I think there are many predictions about how Samsung Electronics' performance will be now in October, but if it comes out as an earnings shock, the stock price can hit the bottom like last time. So, I hope you don't get too absorbed in pessimism while considering these things.
◆ Cho Tae-hyun: If Samsung Electronics' stock price falls to the KRW 50,000 range. It went up to 50,000 won during the day. Then can I buy some?
◇ Lee Ji-hwan: If you are a short-term investor, you will make short-term stock gains with momentum. It'll be hard to approach this, but in the long run. In particular, what I want to emphasize a little is that when I look at the DRAM cycle, the stock price growth rate is high until December next year. If you are confident of holding it until December next year, I think you can split it.
◆ Cho Tae-hyun: That's why stocks are done with extra money, not by borrowing money. That's what they said. But isn't Samsung Electronics itself in a crisis right now? These words keep coming out. The foundry is not producing results. In particular, HBM's high-bandwidth memory is not officially announced yet that it is going to Nvidia, but do you agree with the saying that it is a crisis?
◇ Lee Ji-hwan: Crisis is right. It's a crisis. So, the most miraculous part is that Samsung Electronics' crisis has been inflated a little and that it has not achieved the results it expected in HBM semiconductors. In this situation, the controversy over the DRAM cycle has sparked the crisis theory of Samsung Electronics as a whole, which is right. However, there are some areas where the crisis is a little exaggerated and there are many concerns about Samsung Electronics' third-quarter performance, but I think the announcement of Micron Technology's performance is a mirror. So if you look at Micron Technology, it's only 8% of the entire DRAM cycle. HBM is only 5%. However, if you look closely this time, the evaluation of HBM was a little generous, but the evaluation of DRAM sales in the data center was also quite good. Then, it seems that there is a part where Samsung Electronics can overcome the crisis, and then there is definitely a good point in that the price cut or cycle will not shrink as rapidly as I thought of the DRAM cycle, but in terms of Samsung Electronics as a whole, as I said briefly last time, I think what Yang Kwang-rae (Professor of National Taiwan University), who led TSMC's R&D, said was the most correct thing. So Yang Kwang-rey led TSMC's overall success, and based on this success, he entered Intel, a comprehensive semiconductor company, where he usually failed. After experiencing the success and failure of TSMC and Intel, the advice I gave to Samsung Electronics was to separate all business parts first, and to separate them by specialization and focus on the main focus in that business sector. Then, it is right for Samsung Electronics to focus on memory semiconductors. I have to think about comprehensive semiconductors separately, and the other thing is that Yang Kwang-rae's expression is a little impressive, but there is no urgency from the people and management in the comprehensive semiconductor. So, if TSMC's death-or-break desperation led to TSMC's success, comprehensive semiconductors were not successful because there was no urgency because they had a certain sales route or even if the yield fell a little, but I think Samsung Electronics should learn from the Intel case and strengthen this part the most now.
◆ Cho Tae-hyun: It's the same everywhere, but there can't be a permanent first place. We should continue to see what changes Samsung Electronics will make in the future and what positive factors there are. Let's listen to the file we prepared and continue to talk about it.
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<News Voice>
Korea Zinc has decided to make a tender offer of 3.1 trillion won against Youngpoong and MBK's attempt to take over management rights. Both sides are working with private equity funds to launch a huge fund offensive worth up to 6 trillion won.
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◆ Cho Tae-hyun: 6 trillion won. My annual salary is several years. Anyway, I think it's an amount that most people can't even imagine. Korea Zinc's management dispute will be the turning point today, right? Why is today a tipping point?
◇ Lee Ji-hwan: It's also the last day of the tender offer that MBK and Youngpoong presented today. So it's the last day I offered 750,000 won, but I think there's some room for this part to be revised. As you know here, Korea Zinc Chairman Choi Yoon-beom proposed another tender offer, so it will probably be revised because there is a difference in timing and price, but anyway, today is the last set date for the tender offer price of 750,000 won, so there seems to be some market reaction to that.
◆ Cho Tae-hyun: Korea Zinc's stock price has risen to 754,000 won now. If so, the possibility of increasing the amount further. There are things like this, right?
◇ I think so. In fact, the open purchase price has already been raised regarding the linked expenses this time. If you look at it like that, the open purchase price currently in Korea Zinc is around 800,000 won, 830,000 won. Since there is a big gap with this part, I think the counterattack will go now, and I'm actually very curious about how far this will go with the market price. So, there are a lot of concerns about whether this is something to go this far. From a shareholder's point of view, a short-term stock price surge cannot be bad, but in the case of Korea Zinc, for example, it is actually the biggest support for Korea in the non-ferrous metal field. So, there is a lot of concern that there is a possibility that the corporate value of Korea Zinc in this area will be fundamentally damaged.
◆ Cho Tae-hyun: Actually, looking at it now, Korea Zinc will cost 100 billion won in financial costs. There were even stories like this. So-called winner's curse, then. Piros' curse, things like that. No matter who wins, it's a situation that's bound to happen, right?
◇ That's all we can do now. In fact, no matter how much momentum there is, the stock price is supposed to come out based on fundamentals, and as we saw during the SM crisis last time, the stock price soared due to short-term momentum beyond the fundamentals. Of course, it feels very good from the perspective of shareholders, but there is little possibility that the stock price will be maintained. Then all the financial costs that were put into it will damage the shareholders later. It's a part that shareholders have to deal with, and if you look at it that way, my road ahead is quite a thorny road, and the other is that it's not a movement to step back on either side like SM, but now it's competing for a very subtle 1% stake. As a result, there is no sign of backing down, and if the stake is rather concentrated on one side, it can be solved, but I would like to say that this result is quite worrisome because it goes back and forth between 0.8% and 1% in a way.
◆ Cho Tae-hyun: Before we started the show, we talked a little bit like small talk and said that Chairman Choi Yoon-beom approached us too roughly, so please note that we are concerned about these side effects. As you said, there was a short-term stock price surge. Goryeo Zinc and Youngpoong. The amount of Youngpoong precision transactions has also increased a lot, so how should I look at the market by now from an individual investor's point of view?
◇ Lee Ji-hwan: As I always say, those who say they can buy and sell as soon as possible and get out of this act can access it, but we've actually experienced it in SM as well. Most of the people who watched the news and approached it later really suffered some significant asset losses.
◆ Cho Tae-hyun: That's inevitable.
◇ Lee Ji-hwan: That's right. It's the same now. And in particular, the case of the Korea Zinc crisis is a little different from that of SM, because there was a slight difference in stake in SM, there were some signs that one side could be resolved in the superiority, but I also check the stake structure every day, and this is really the top 0.5% to 0.8%. So, in some ways, Youngpoong Precision has a 1.5% stake now, but if the stake is settled this time, it will probably be about 2%, so the company that owns Youngpoong Precision is quite likely to secure management rights at the end.
◆ Cho Tae-hyun: That's the key point.
◇ Lee Ji-hwan: As a result, this overheating pattern expands to a few companies, including Youngpoong Precision. So, the aftereffects are likely to be quite big, and it's worrisome, and it's entirely up to the shareholders, so I think it's right for those who approach this part to look at it at the current price range. It seems that the time to hit and miss has passed a little bit now.
◆ Cho Tae-hyun: As I've repeatedly said, the stock price is bound to find its place one day, so you need to be careful about the stock price trend that is separated from the fundamentals. We were talking about buying back our own shares. I'll just look at one more company. Naver. Naver announced its plan to buy back its own shares. Why did you reveal this plan? How big is it?
◇ Lee Ji-hwan: Naver is probably criticized by some people after the Line incident, there are management difficulties, and the stock price is quite stagnant, so we bought back our own shares and it's about 400 billion won. It is not a small part, but it has announced that it will buy about 400 billion won of treasury stocks, and one good thing is that it will burn treasury stocks on December 31st. This is a good point. In fact, Korean companies buy a lot of treasury stocks, unlike American companies, but the incineration rate is very low.
◆ Cho Tae-hyun: That's right. It's just a scam.
◇ Lee Ji-hwan: It takes the form of buying first and then reselling it if necessary, and this 400 billion won is right to raise shareholder value because we announced a plan to incinerate all of this on December 31st. And because this share purchase cost itself is a dividend from a holding company related to Line, it is not that burdensome for shareholders. So it's a little positive in that regard. However, if you look at the reality that Naver is in right now, it's not that easy. The part that arose from the current Line incident. And since the subsidiary part that was listed in relation to webtoons in the United States is not as high as expected, and the other thing is that Naver itself is being criticized for being related to Clova, which we know has invested in AI, it has been suggested as a way out to improve shareholder value from a beleaguered point of view. You can take it that way.
◆ Cho Tae-hyun: One simple question. There is a limit to increasing shareholder value just by buying treasury stocks, and you have to incinerate to increase it, right?
◇ Lee Ji-hwan: That's definitely the case. The incineration rate in the United States is almost 90% or higher. So, when we announce the purchase of treasury stocks, the U.S. stock price jumps 5% and 10% even if it is a large stock. But the reason why it doesn't work even if we buy back treasury stocks is because there are many parts such as buying treasury stocks and using incentives to employees later or dealing with them at some cost, so I think we should actually burn treasury stocks at least 80 to 90 percent of the time.
◆ Cho Tae-hyun: Okay. In fact, the reason why the U.S. banned treasury stock purchases before the Reagan administration was because it saw it as a blatant manipulation of stock prices, but the reason why it is not working in Korea is because incineration is also too low. So far, I have analyzed various issues surrounding the financial market in detail with CEO Lee Ji-hwan of I Asset. Thank you for talking today.
◇ Thank you.
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