[MarketING] Samsung and Hynix Close Up Over 2%... Securities Stocks Also Strong Amid Interest Rate Adjustment

Tech and Growth Stocks Shine in US BabysStep
Mixed Fortunes in Financial Sector... Banks & Insurance Down, Securities Up

[Asia Economy Reporter Song Hwajeong] As the U.S. Federal Reserve (Fed) slowed the pace of interest rate hikes with a baby step (a 0.25 percentage point increase in the benchmark rate), the domestic stock market also eased concerns and closed strong. The adjustment in the pace of rate hikes caused mixed reactions across different sectors.

Technology and Growth Stocks Rally on Slower Rate Hikes

On the 2nd, the KOSPI closed at 2,468.88, up 19.08 points (0.78%) from the previous day. The KOSDAQ ended the day at 764.62, rising 13.66 points (1.82%).

Relieved by the February U.S. Federal Open Market Committee (FOMC) results, the KOSPI regained the 2,460 level. It rose to as high as 2,480 early in the session but closed below 2,470 as gains narrowed. The KOSDAQ continued its third consecutive day of gains, reclaiming the 760 level.

Technology and growth stocks showed notable strength amid the U.S. slowing the pace of rate hikes. The Nasdaq, which is tech-heavy, also closed up 2% in the previous day’s New York market. Kim Seokhwan, a researcher at Mirae Asset Securities, analyzed, "The Philadelphia Semiconductor Index rose 5%, and the domestic market followed the Nasdaq and tech stock rally, with semiconductor, internet, and electric vehicle sectors showing strength."

On the day, Samsung Electronics rose 2.75% from the previous day, continuing its strong performance for the second day and nearly recovering the sharp drop in stock price after its earnings announcement on the 31st of last month. SK Hynix also rose 2.52%. Han Jiyoung, a researcher at Kiwoom Securities, said, "After the U.S. market closed the previous day, Meta’s strong quarterly earnings and share buyback announcement caused its stock price to surge significantly in after-hours trading, positively influencing domestic growth stock investor sentiment. Although Korea’s semiconductor exports in January were significantly weak and the impact of Samsung Electronics’ failure to implement artificial production cuts remains, the Philadelphia Semiconductor Index’s sharp rise due to macro issues will likely have a short-term positive effect on domestic semiconductor stocks."

Leading domestic growth stocks NAVER and Kakao also showed significant gains. NAVER rose 2.92%, and Kakao closed up 3.70%. Interest rate cuts reduce the burden on companies’ future valuations, acting as a positive factor for growth stock prices.

Banks and Insurance Stocks Weaken… Securities Stocks Strengthen

Within the financial sector, which is directly linked to interest rates, the mood was more distinctly divided. Banks and insurance stocks, considered beneficiaries of rate hikes, weakened, while securities stocks rose on expectations of rate cuts.

On the day, the KRX Bank Index fell 1.95%, and the KRX Insurance Index dropped 3.52%. The Securities Index rose 0.60%.

This trend is expected to continue in this year’s earnings as well. Banks, which saw significant profit growth due to rate hikes until last year, are expected to see earnings slow down, while securities stocks, which struggled due to rate hikes, are forecasted to gradually improve.

Jeon Baeseung, a researcher at Ebest Investment & Securities, said, "The financial sector is expected to show a different direction this year. With weakening momentum in interest rates and earnings, insurance and bank stocks are unlikely to perform as well as last year." Bank net interest margins are expected to decline in the second half of the year, and credit loss burdens are expected to increase. For the insurance sector, the favorable insurance profit trend is expected to come to an end.

Jeon added, "For the securities sector, concerns about liquidity tightening are easing, and market risks are decreasing, increasing the possibility of a business recovery. Although real estate project financing (PF) concerns remain, the worst is considered to be behind us, and profitability improvement is possible, centered on brokerage and asset management profits."