KCGI CEO Mok Dae-gyun cites semiconductor cycle, U.S. investment, and Value-up Program as drivers
“If mandatory share buybacks and the resolution of the Korean stock market’s undervaluation compared to other emerging markets are achieved, the KOSPI index could surpass 5,000 points.”
Mok Dae-gyun, CEO of KCGI Asset Management, recently expressed confidence in a strong performance for the new year’s stock market during an interview with Chosun Biz. He emphasized that the semiconductor supercycle, the capital goods investment cycle in the U.S., and the government’s Value-up Program are combined forces powerfully driving the market upward.
Mok stated, “Last year, when the new government set the ‘KOSPI 5,000’ goal, the domestic stock market’s price-to-book ratio (PBR) was 1x, while emerging markets like Taiwan had a PBR of 1.5x. If the undervalued Korean market’s PBR is re-evaluated and share buybacks are implemented, there is significant room for growth. Breaking the 5,000-point mark for the KOSPI index is easier than expected.”
Mok, who graduated from Seoul National University’s College of Business Administration, previously served as head of the global investment division at Mirae Asset Global Investments before becoming CEO of K Global Asset Management in 2020. In 2023, he moved to KCGI Asset Management as CEO.
A Q&A with Mok follows:
ㅡWhat is the most important condition for the stock market boom to continue?
“First, the AI investment cycle must continue. Second, this cycle should expand beyond data centers to areas like power infrastructure. The government’s consistent implementation of the Value-up Program is also critical. Lastly, currency stability is needed to reassure foreign investors. These conditions must align for the KOSPI 5,000 to materialize.”
ㅡWhat trends do you expect for the domestic stock market this year?
“AI, which drove last year’s market, will likely continue leading gains, potentially expanding its influence. While data centers and power equipment stocks gained attention previously, the focus may now shift to software utilizing AI and physical AI applications. Companies like Naver and Kakao, which generate profits through software, could attract more interest.”
ㅡWhich companies or sectors should be prioritized this year?
“The advice remains to increase exposure to large-cap semiconductor stocks like Samsung Electronics and SK Hynix, which are tied to AI. Additionally, automobile stocks are worth watching. Their valuations are low, tariff risks have eased, and hybrid vehicle sales are rising. Strong sales in emerging markets like India are also notable. Hyundai Motor’s autonomous driving and robotics ventures are another area to monitor.”
ㅡWhile semiconductor profits are surging, concerns about an AI bubble are growing.
“The current AI surge could be a bubble. However, reducing investments now due to perceived overheating might mean missing opportunities.
Imagine running a restaurant where customers increased 30-fold last year. To accommodate demand, you’d need to expand, possibly through loans, which might delay immediate profit growth. With a long line of customers, uncertain timing for their departure, and competitors emerging, would you retreat or expand?
Big Tech leading the AI industry faces this dilemma. With growing AI demand — from text-based to video, voice, and physical AI — falling behind could mean obsolescence.
However, risks exist. Accelerated investment cycles have outpaced cash flows, forcing Big Tech to secure long-term capital (30-40 years). High interest rates raise concerns about repayment, as seen in Oracle’s widening credit default swap (CDS) spread, fueling bubble fears.”
ㅡWhat concerns exist regarding the AI bubble and the stock market?
“Volatility could intensify. The KOSPI is at a historical high, and without revaluation, investors may seek profits.
Another issue is the weak won. Foreign capital acts as ‘fuel’ for the market, but currency stability is crucial. Foreign investors won’t tolerate exchange losses. If the won’s weakness persists, they may exit.”
ㅡLast year, the KOSPI rose 75%, but the KOSDAQ lagged.
“Trading volume and margin balances in the KOSDAQ increased in the second half of last year. However, the market lacked strong leaders. Sectors like biotech, secondary batteries, and robotics — key to the KOSDAQ — have weak earnings visibility. While the direction is positive, it may take time to materialize.
Valuations appear high relative to fundamentals, causing investor caution. Whether KOSDAQ leaders can provide convincing visibility remains uncertain.
Nonetheless, rising trading value, margin balances, and government policies like the KOSDAQ Venture Fund offer positive signs.”
ㅡWhat investment strategy do you recommend for this year?
“Volatility may lead to frequent corrections. Instead of panicking, confirm if the long-term upward trend persists. If the structure remains intact, buying during dips isn’t a bad strategy.”
