[Seoul Market Wrap] AI Bears Silenced by 'Niks' Stellar Performance

SK Hynix's surprise performance and confidence in long-term supply lead to a sharp rebound in semiconductors. Samsung Electronics and SK Hynix led the KOSPI increase by about 270 points.

Key market trends

• ① SK Hynix 'earnings surprise'… The theory that the industry is at its peak calms down

SK Hynix announced performance that exceeded market expectations, lowering concerns about the peak of the semiconductor industry.

Third quarter sales were 104.6 trillion won and operating profit was 83.3 trillion won, exceeding market expectations of 97 trillion won and 76 trillion won.

A dividend of 20,000 won per share and a plan to buy back shares worth 20 trillion won were also announced. It also hinted at the possibility of purchasing its own shares every quarter in the future.

What led the market reaction was confidence in the mid- to long-term business conditions. SK Hynix predicted that demand will exceed supply in the memory market by 2030. DRAM and HBM announced that sales volume is virtually secured until 2029.

The number of long-term contract customers has increased to 14, and more than 50% of the volume for 2027 and 2028 has been secured through long-term contracts. This content alleviates the recently raised theory that the memory industry is at its peak and concerns about oversupply from China.

• ② AI company financing continues… Alleviating data center investment concerns

The continued rebound of AI-related stocks in the U.S. stock market also gave strength to domestic semiconductor stocks.

There has also been a change in the financing of AI companies, which has been the biggest concern in the market recently. Antropic secured $63 billion in funding through financial institutions, and Meta increased capital by $25 billion. Plans for additional financing are also being pursued.

Including Space

Concerns that it may become difficult to secure funds to cover large-scale AI infrastructure investments have been partially alleviated. Expectations for continued investment in AI infrastructure have also risen again, given that a significant portion of the funds raised will be invested in the purchase of data centers and semiconductors.

• ③ Samsung Electronics and SK Hynix soar... Intensive purchase of semiconductors by Foreign Investors and institutions

The top four stocks in market capitalization, including Samsung Electronics and SK Hynix, soared at the same time, raising the index.

The contribution of the two stocks, Samsung Electronics and SK Hynix, to the rise in KOSPI alone amounted to about 270 points. The buying trend also spread to semiconductor equity-related stocks, small business, securities, and communications equipment.

Foreign Investors made net purchases, mainly in electrical and electronics, and also bought chemicals, transportation warehouses, general services, and IT services. Institutions also concentrated their purchases in electrical and electronics and recorded net purchases in finance and distribution.

In KOSDAQ, institutions bought semiconductor-related industries while selling pharmaceuticals. Foreign Investors sold machinery, electricity and electronics and made net purchases of pharmaceuticals and entertainment.

Supply and demand and industry

KOSPI rose the most since July 31. Samsung Electronics and SK Hynix led the rise in the index, and the scope of the increase expanded to include semiconductor managers and related equity stocks.

As Foreign Investors and institutions simultaneously intensively purchased electrical and electronic stocks in the stock market, the supply and demand of large-cap stocks, which had been weak recently, has also improved.

The situation in the Middle East also eased the burden. As Iran's Supreme Leader stated that the current situation must end, the possibility of a solution through dialogue was highlighted. Although international oil prices remain high, concerns about additional conflicts have decreased somewhat.

Market Man's Perspective

The theory that the semiconductor industry is at its peak, which has recently shaken the stock market, has passed a critical juncture thanks to SK Hynix's performance and future prospects. In particular, the explanation that DRAM and HBM volumes have virtually been secured by 2029 and the expansion of long-term contracts are more important to the market than simple quarterly performance.

Concerns about AI investment funds have also eased somewhat. Antropic, Meta, and Space This material reduces recent concerns that semiconductor demand and AI infrastructure investment will decline simultaneously.

Big events such as the FOMC, Big Tech performance, and the U.S. midterm elections will follow in the future. There is a possibility that short-term profits will be sold after a sharp rebound.

Nevertheless, KOSPI has recently fallen to near the oversold range. As there is no immediate trend of damage to corporate performance, it is necessary to continue to monitor the movements of existing leading stocks and stocks with accumulated institutional purchases.

Source: Market Man's stock story t.me/shmstory

YouTube: Sihwangman TV www.youtube.com/@blueoak1004

This article was rewritten from Shihwangman's Stock Story Telegram post with the author's consent. All content may contain errors and cannot be used as a basis for buying or selling as it is not a recommendation to buy or sell. The content of this post cannot be used as legal basis under any circumstances.