As of mid-February, the KOSPI index is maintaining a high volatility while hovering around the 5500 mark. The underlying drivers supporting the upward trend in South Korea's stock market remain robust, primarily driven by performance factors. The earnings forecasts for critical industries such as semiconductors, shipbuilding, and defense have been revised upward by 20-30% compared to the beginning of the year, bolstered by accumulated order backlogs and ongoing price increases. Semiconductor prices are rising due to excessive demand, while order-driven industries have secured workloads for several years ahead.

Moreover, a paradigm shift in corporate valuation is also supporting the stock price increase. Thanks to improvements in laws and regulations, the burden of fiduciary duty of boards to general shareholders has intensified, shifting the focus of earnings distribution from major shareholders to all shareholders. Policies aimed at increasing shareholder returns, such as stock buybacks and higher dividends, have set new evaluation standards leading to substantial stock price increases for holding companies and related financial firms.

However, external signs warrant concern. Particularly in the US market, fears that artificial intelligence (AI) could disrupt existing business models and doubts about investment profitability are shaking the software and service industries. The price of the iShares Expanded Tech-Software Sector ETF (IGV), a representative index of US software stocks, has dropped over 20% since the beginning of the year amid worries that AI's spread will erode the pricing power of traditional subscription models. Additionally, concerns about potential failures in private debt funds, compounded by the investment burden of AI, could weigh heavily on the bond market. Although the likelihood of credit risk remains low, it possesses high destructive potential if it occurs, rendering it generally negative for the prices of risk assets.