[MarketING] KOSPI Approaches 2430 Level... Strengthening Semiconductor Stock Bottom Theory

Semiconductor Strength Drives KOSPI Back to 2420 Level
Samsung Electronics Up 2.59%, SK Hynix Rises 4.34%

[Image source=Yonhap News]

[Asia Economy Reporter Song Hwajeong] The KOSPI rose more than 1%, approaching the 2430 level. This was driven by the semiconductor stock bottom theory and foreign buying, leading to significant gains in Samsung Electronics and SK Hynix. If Samsung Electronics announces production cuts in its finalized earnings report at the end of this month, the stock price rally is expected to gain further momentum.

KOSPI Recovers to 2420 Level Amid Semiconductor Strength

On the 25th, the KOSPI closed at 2428.57, up 33.31 points (1.39%) from the previous session. The KOSDAQ ended the day at 732.35, rising 14.38 points (2.00%). The KOSPI reclaimed the 2420 level, and the KOSDAQ surpassed the 730 level.

Samsung Electronics and SK Hynix led the stock price rally with significant gains. Samsung Electronics closed at 63,400 KRW, up 2.59%, while SK Hynix ended at 91,400 KRW, up 4.34%. Samsung Electronics reached the 63,000 KRW mark for the first time since June last year, and SK Hynix settled in the 90,000 KRW range after more than two months.

The strong performance of semiconductor stocks such as AMD (9.2%), Nvidia (7.6%), and Qualcomm (8.13%) in the U.S. stock market the previous day influenced the trend. During the holiday period, the Philadelphia Semiconductor Index rose 7.5%. Semiconductor stocks are showing strength amid expectations of industry improvement and the stock bottom theory. Investment bank Barclays released a report stating that the semiconductor industry outlook has turned positive this year, upgrading its investment ratings on AMD, Qualcomm, and Seagate Technology from 'Equal Weight' to 'Overweight.'

Foreign investors are also actively buying semiconductor stocks amid expectations of industry improvement and the stock bottom theory. Foreigners have net purchased Samsung Electronics for 15 consecutive days as of this day. SK Hynix has been bought for 14 consecutive days. During this period, foreigners net purchased 1.9656 trillion KRW worth of Samsung Electronics and 647.6 billion KRW worth of SK Hynix.

Choi Yujun, a researcher at Shinhan Investment Corp., said, "The rebound in Korean semiconductors is driven by expectations of a shift in memory semiconductor supply strategy following Samsung Electronics' preliminary earnings shock announcement for Q4 last year," adding, "The strength of U.S. tech stocks could reinforce the semiconductor-led rebound in the domestic stock market."

Will the Pre-Reflected Samsung Electronics Production Cut Expectations Materialize?

As semiconductor stocks continue their rally this year on expectations of industry improvement, market attention is focused on Samsung Electronics' finalized Q4 earnings report scheduled for the end of this month. The market expects production cut-related content to be announced during the earnings conference call on the 31st, which has already been priced into the stock.

Kim Yangjae, a researcher at Daol Investment & Securities, said, "With lowered set demand expectations this year, industry inventories are normalizing, and although there are sectoral differences in the parts industry, active production cuts and supply adjustments are being reflected, improving supply and demand," adding, "The main focus of Samsung Electronics' earnings announcement is whether it will join memory production cuts, which is expected to signal a turnaround in the memory industry if confirmed."

On the other hand, some remain skeptical about the production cut decision and the resulting stock price rally. Lee Kyungmin, a researcher at Daishin Securities, said, "Since early January, domestic investors have already taken Samsung Electronics' production cuts as a given and reflected the possibility of early semiconductor industry improvement in stock prices," adding, "We view the likelihood of production cuts in the first half as low, and if Samsung Electronics does not decide on or delays production cuts, a stock price shock is inevitable." He further noted, "Despite the earnings shock, the stock price has already risen more than 10%, so even if production cuts are formalized, it is uncertain whether the stock price will rise further."