A Turbulent Week as Key Variables Await Clarity
Financial expert Huang Shicong said on the 28th on the show Smart Wealth that global stock and currency markets have seen sharp volatility recently, with markets awaiting two major events: Big Tech earnings due out starting this week, and the U.S. midterm elections on November 3. He described the coming stretch as "a turbulent week," adding that stocks and currencies could stabilize relatively once these variables clear, leaving only the Federal Reserve rate decision in December to watch.
Korean Stocks Show Bottoming Signals and Valuation Gap
SK Hynix today reported strong earnings, expressing an optimistic view on the memory outlook for the next two years, and announced shareholder return plans, driving Korean stocks up about 5% to 6%, possibly an early bottoming signal. He noted that Korean stocks fell all the way from a high of 9385 points and broke below the yearly moving average. Currently Samsung and SK Hynix trade at an estimated P/E of only about 3 to 4 times, far below Nvidia and TSMC at over 20 times, mainly due to the memory cycle, geopolitical risks, competitive pressures, and mixed market views on AI.
Cloud Earnings and AI Spending in Focus
On earnings from the three major cloud giants Google, Microsoft and Amazon, Huang Shicong said markets will examine whether AI capital spending can deliver actual returns, the scale and direction of future capital spending, and changes in free cash flow. He noted that Meta posted negative free cash flow for the first time last earnings, and whether cash burn accelerates across these companies will be a focus this time. He stressed that the long-term outlook for AI is intact, but the short term may see industry shakeout, similar to the past railroad and internet bubbles. In addition, oil prices and U.S. Treasury yields both pulled back recently, with the 10-year U.S. Treasury yield falling below 5%, easing pressure on stocks. However, Huang Shicong warned that Trump has become highly tied to the AI industry through policies such as energy deregulation, regulatory easing, and restricting China's chips, and related industries could face uncertainty if the midterm elections go badly.
Taiwan Stocks at Elevated Levels; Buy ETFs on Dips
Turning to Taiwan stocks, Huang Shicong noted that Taiwan stocks are currently around 46,000 to 47,000 points, below the quarterly moving average and above the half-year moving average. Compared with the Philadelphia Semiconductor Index already below its half-year moving average and Korean stocks below their yearly moving average, Taiwan stocks are at relatively elevated levels. With heavy selling by foreign investors and still-high margin balances, chip conditions face pressure. He advised those already holding stocks to stay invested, while those with limited holdings can buy ETFs on dips, and watch CPO, copper-clad laminate, ABF and TSMC-related ASIC groups, while closely monitoring the Philadelphia Semiconductor Index and Korean stock moves.