The Boom & Shock Index, an artificial intelligence (AI)-based equity risk management index jointly developed by Maeil Economy and Kraft Technologies, showed “0” in both its Korean and U.S. versions this week.
A boom and shock index of 0 to 10 means a reduction in the cash share, 11 to 50 means neutral and 51 to 100 means an expansion.
The Korean version lowered the risk from 2 to 0. Although the Korean stock market remains sluggish, the AI market is considering the possibility of a continuation of a stable trend as the valuation burden is eased and an interest rate cut is expected in the US.
In particular, there is optimism about a possible recovery in the stock market after it has processed disappointment over the performance of major companies, including Nvidia, and eased recession fears.
Lee Kyung-min, an analyst at Daishin Securities, said: “We expect the KOSPI to attempt to recover in the first week of September, leaving behind the two-week resolution of short-term overheating and the process of processing sales.” “The KOSPI is likely to exceed the 2,700 mark as it confirms continued strong export momentum in Korea, the US manufacturing index is picking up again and employment indicators are improving.”
However, some advise not to give up caution regarding interest rate volatility.
Cho Byung-hyun, a researcher at Daol Investment & Securities, said: “It is time for caution as the mixed interpretation of the impact immediately after the first rate cut offers the possibility of rapidly increasing interest rate volatility,” adding: “Risk management and defensive approaches are likely to be effective and interest in dividends and shareholder returns may increase.”
There was still no risk for the US version after last week.
After a 10% correction in early August, the US stock market recovered thanks to economic growth, positive earnings and expectations of a rate cut by the US Federal Reserve (Fed). Although volatility is expected ahead of the presidential election in November, AI interprets the market reaction to the rate cut as positive.
(Reporter Woo Soo Min)
