Samsung Electronics Hits 70,000 Won, Leading KOSPI Rally

Expectations for Long-Term Boom in Semiconductor Industry
KOSPI Hits Record Highs Consecutively

[Asia Economy Reporter Song Hwajeong] Samsung Electronics' stock price has surpassed the 70,000 KRW mark for the first time ever. The strong performance of Samsung Electronics is expected to lead to a continued rally in the KOSPI, which has been hitting record highs day after day recently, greatly boosting expectations for the year-end stock market.

As of 10:20 AM on the 3rd, Samsung Electronics was trading at 70,000 KRW, up 0.72% (500 KRW) from the previous day. During the session, it rose as high as 70,500 KRW. Samsung Electronics has maintained a strong upward trend for three consecutive days, reaching the 70,000 KRW milestone. This is nearly double the level from 23 months ago when it recorded an intraday price of 36,850 KRW on January 4th last year.

Expectations that the semiconductor industry may enter a long-term boom phase are driving Samsung Electronics' stock price higher and supporting the KOSPI. On the 23rd of last month, the KOSPI surpassed the 2,600-point mark for the first time in 2 years and 10 months, setting a new all-time high. After breaking record highs for two consecutive days and taking a one-day break, the KOSPI again set new record highs for two consecutive days, took another day off, and then reached new highs for two consecutive days again. Recently, it has broken its record high six times, approaching the 2,700-point level.

The KOSPI rally has been led by foreign investors. Over the past month, foreign investors have purchased 5.5867 trillion KRW worth of KOSPI stocks. Whether the KOSPI's upward momentum continues will largely depend on foreign investors' movements. On the 30th of last month, when foreign investors sold a record 2.4377 trillion KRW worth of KOSPI stocks, the KOSPI fell by 1.6%. This demonstrated that foreign investors' buying activity is essential to sustain the KOSPI's rise. However, the foreign selling on the 30th is expected to be temporary, and the overall net buying trend is unlikely to change. KTB Investment & Securities analyst Park Seokhyun explained, "The foreign selling on the 30th was due to the regular rebalancing of the Morgan Stanley Capital International (MSCI) index, which reduced Korea's weighting, causing a surge in foreign selling mainly from passive funds. This is considered a one-time factor that has been resolved." Park added, "The trend of foreign investors will closely follow changes in corporate earnings forecasts. The KOSPI's 12-month forward operating profit forecast is expected to rise to the mid-180 trillion KRW range by year-end, so no change in the foreign net buying trend is anticipated."

Expectations for improved corporate earnings, centered on Samsung Electronics, are also likely to support the KOSPI's strength. According to financial information provider FnGuide, Samsung Electronics' consensus operating profit for Q4 this year is 10.1611 trillion KRW, expected to increase by 41.91% compared to the same period last year. The annual operating profit for next year is projected to rise by 24.45% to 46.1792 trillion KRW. Jo Byunghyun, an analyst at Yuanta Securities, said, "The earnings surprises from major companies in Q3 and expectations for economic recovery next year are accelerating upward revisions of domestic corporate earnings forecasts. Although technical resistance or supply-demand gaps might slow the upward momentum, a positive market trend can still be expected."

Lee Jaeman, an analyst at Hana Financial Investment, analyzed, "In the past, after Samsung Electronics set new highs, the rally lasted between 16 months at the shortest and 22 months at the longest. Samsung Electronics is expected to see a greater effect of volume improvements translating into operating profit through margin improvement and fixed cost reduction than before. We can expect earnings surprises or upward revisions of profit estimates in the future."