Kim Jung-hyun, ETF Business Group Head at Shinhan Asset Management, recommended a 'barbell strategy' combining semiconductor and financial stocks in a recent interview with Hankyung.com, citing inevitable volatility in the second half of the year. Kim stated that market doubts about the semiconductor industry outlook will continue, driven by the reignited Middle East conflict, semiconductor peak-out concerns, and supply-demand distortions from single-stock leverage products. The Korean stock market has experienced significantly expanded volatility due to these combined factors including US-Iran military conflict, semiconductor industry peak debates, and market distortions from single-stock leverage products.
Shinhan Asset Management Recommends 7:3 Stock-Cash Ratio with 6:4 Semiconductor-Financial Split
Kim Jung-hyun advised investors to allocate investment funds in a 7:3 ratio between stocks and cash. Within the stock portion, he recommended a 6:4 weighting between leading semiconductor stocks and defensive high-dividend financial stocks. Kim stated, "Unlike the upward trend in the first half, the second half requires enduring high market volatility." He explained that a barbell strategy—constructing a portfolio using two assets at opposite ends of the spectrum—is necessary as the market shifts away from growth stock concentration toward partial diversification into defensive stocks.
Big Tech Earnings at End of Month to Determine Semiconductor Industry Direction
Kim identified global Big Tech earnings to be announced at the end of this month as a watershed moment for gauging the semiconductor industry outlook. He stated, "It needs to be confirmed that not only memory semiconductor companies are making money, as Big Tech results exceed market expectations." Kim added, "If they provide guidance that they will further increase artificial intelligence (AI) investment, the market could rebound in a V-shape." He noted that semiconductor stocks have undergone significant price corrections due to industry peak concerns, but the companies' fundamental strength remains intact, making it crucial to withstand volatility until market distrust is resolved.
Financial Stocks Offer Defense with Stable Cash Flow and High Dividends
Kim emphasized that investors should focus on financial stocks with high dividends and strong shareholder return expectations at the current juncture. He explained, "In a situation where market volatility has increased, there is a possibility that funds will flow into high-dividend stocks with solid earnings and stable cash flow." Kim highlighted that financial stocks provide defensive characteristics with stable performance and consistent cash generation, making them suitable for the volatile market environment.
Shinhan Asset Management Highlights Two ETF Products for Strategy Implementation
Kim recommended considering related exchange-traded funds (ETFs) for investors who find individual stock selection challenging. He highlighted 'SOL AI Semiconductor TOP2 Plus' ETF as Shinhan Asset Management's representative semiconductor sector product, which has recorded the number one cumulative net buying by individual investors among domestic semiconductor ETFs. The product invests over 40% in Samsung Electronics and SK Hynix, the "semiconductor two-top," and allocates 40% to SK Square (SK Hynix's largest shareholder) and Samsung Electro-Mechanics, concentrating investment in four stocks. Through recent rebalancing, the ETF also included front-end equipment stocks such as Wonik IPS and Daeduck Electronics, which are expected to benefit from memory company expansion. For financial stocks, Kim presented 'SOL Financial Holding Plus High Dividend' as the representative product, which consists of 80% weighting in the four major financial holding companies—KB, Shinhan, Hana, and Woori—and pays monthly dividends.
FAQ
What investment strategy did Shinhan Asset Management recommend for Korean stocks?
Kim Jung-hyun of Shinhan Asset Management recommended a barbell strategy in a recent interview with Hankyung.com, suggesting a 7:3 ratio of stocks to cash, and within stocks, a 6:4 ratio between semiconductor stocks and financial stocks.
When will Big Tech earnings provide clarity on semiconductor industry outlook?
According to Kim Jung-hyun, global Big Tech earnings to be announced at the end of this month will serve as a watershed moment for determining the semiconductor industry direction, particularly their capital expenditure plans and AI investment guidance.
Why did Kim Jung-hyun emphasize financial stocks in the current market?
Kim stated that financial stocks with high dividends, stable cash flow, and solid earnings offer defensive characteristics in the current high-volatility market environment, making them suitable for portfolio diversification alongside semiconductor holdings.
