Despite Value-Up Index Inclusion News, Stock Price Plummets

Semiconductor Stocks Shrink Ahead of Micron Earnings Announcement
KB and Hana Financial, Removed from Index, Drop Over 4%

The day after the 'Korea Value-Up Index' was announced, on the 25th, inclusion in the index did not act as a positive factor to boost stock prices. Samsung Electronics and SK Hynix saw buying momentum in the early trading hours, rising more than 2% intraday, but gave up their gains by the end of the session, with Samsung Electronics closing lower. Bank stocks showed notable declines regardless of whether they were included in the index or not. This is interpreted as a result of disappointment over exclusion from the index and an increase in profit-taking selling.

According to the Korea Exchange on the 26th, stocks included in the Korea Value-Up Index such as Samsung Electronics (-1.58%), Hyundai Motor (-0.59%), Celltrion (-2.68%), and Kia (-0.96%) all closed lower the previous day. Samsung Electronics initially rose more than 1% with apparent buying interest but gradually reduced its gains and ultimately gave back all the late-session increases. SK Hynix (1.10%) and Hanmi Semiconductor (0.95%), which had risen more than 3% intraday, closed with gains in the 1% range. Although there was a favorable trend early in the session due to the news of inclusion in the Value-Up Index, semiconductor stocks' movements appeared subdued amid caution ahead of Micron Technology's earnings announcement.

Stocks included in industrials showed mixed results. HMM (1.32%) and LIG Nex1 (0.45%) rose, but most others such as POSCO International (-1.95%), Korean Air (-0.22%), Hyundai Glovis (-2.09%), HD Hyundai Electric (-0.80%), and Doosan Bobcat (-2.83%) closed lower.

Financial stocks also failed to defend their prices due to heavy profit-taking selling despite index inclusion. Shinhan Financial Group fell more than 5%, and Samsung Fire & Marine Insurance dropped over 4%. Meritz Financial Group (-0.53%), Woori Financial Group (-1.33%), Mirae Asset Securities (-2.31%), and Kiwoom Securities (-3.69%) also showed declines.

Ji-won Kim, a researcher at KB Securities, analyzed, "While differentiation among stocks based on index inclusion progressed, many included stocks experienced profit-taking selling. In particular, financial stocks, which were spotlighted as key beneficiaries of the Value-Up policy, saw intensified selling pressure."

Stocks that had been continuously mentioned as related to Value-Up but were excluded from the index this time also showed significant declines. KB Financial Group and Hana Financial Group are representative examples. KB Financial fell 4.76%, and Hana Financial Group dropped 3.19%.

However, there is also a view that rather than being disappointed by stocks excluded from the index this time, attention should be paid to their future trajectory. Jae-woo Kim, a researcher at Samsung Securities, stated, "Among financial companies that failed to be included in this index, it is necessary to focus on the possibility that they may strengthen efforts to improve price-to-book ratio (PBR) and return on equity (ROE) with the goal of inclusion during the index rebalancing period in June next year. From this perspective, the primary point of observation will be these companies' plans to enhance corporate value and their future guidance during the third-quarter earnings season."