Samsung Electronics and SK Hynix closed their first trading day of October with gains, pushing up the KOSPI index. Micron's strong earnings in the United States eased pessimism about the semiconductor industry outlook. With variables piling up on top of each other just before the earnings season, securities firms are watching the supply and demand patterns after the share buybacks of the two major semiconductor stocks end as a short-term turning point.
According to the Korea Exchange on the 1st, foreign investors net sold 21.5246 trillion won worth of shares in the KOSPI market last month, while retail investors net sold 14.1971 trillion won. Institutional investor net purchases amounted to only 4.3893 trillion won. The remaining selling volume was effectively absorbed entirely by other corporations (net purchases of 31.3988 trillion won).
Other corporations is an account that aggregates the trading performance of general companies excluding financial institutions. Previously classified as a minor supply and demand player with daily net trading volumes in the hundreds of millions of won, it has served as a "volatility support" by net purchasing 1 trillion to 1.5 trillion won per day since mid-to-late August, when Samsung Electronics and SK Hynix began large-scale share buybacks. In fact, the sidecar (futures market circuit breaker), which was triggered 49 times this year, has not been activated since the share buybacks began.
The issue is that the share buybacks of the two major companies are nearing their end. Samsung Electronics, which disclosed the acquisition of 53.29 million shares in August and placed orders for 2 million shares each trading day, is scheduled to complete its purchases on this day. SK Hynix, which announced plans to acquire 24.07 million shares and has been buying 600,000 to 650,000 shares per day with a fill rate exceeding 70%, is expected to place its final orders around the 15th to 17th.
Concerns are growing as a series of stock market events are scheduled after this supply and demand pillar disappears. Immediately, Samsung Electronics' preliminary earnings release for the third quarter is expected on the 8th, which coincides with the domestic options expiration date. Exchange-traded fund (ETF) rebalancing is also scheduled to take place on that day.
Jung Kyun and Shin Su-han, research analysts at Samsung Securities, stated, "The scale of ETFs undergoing regular rebalancing this month is 23 trillion won in total, including 18.1 trillion won for semiconductors, 1.6 trillion won for secondary batteries, and 600 billion won each for robotics and nuclear power." They added, "Given that the regular change date is set as 'the next business day after the October options expiration date or the first business day of the week following the expiration date,' actual rebalancing will be concentrated on the 8th when considering holidays, so attention must be paid to potential supply and demand conflicts."
Around the time SK Hynix's share buyback is scheduled to end, the release of the U.S. September consumer price index (CPI) and producer price index (PPI), the Asia-Pacific Economic Cooperation (APEC) Finance Ministers' Meeting, and the GTC conference hosted by Nvidia will follow in succession. In the last week of this month, when SK Hynix's quarterly earnings release is expected, the U.S. Federal Open Market Committee (FOMC) meeting for October is scheduled.
The recent controversy over the initial public offering (IPO) of its U.S. grandchild company Solidigm has also emerged as a potential variable. SK Hynix maintains that "nothing has been finalized." Politically, the U.S. midterm elections are scheduled for the 3rd of next month (local time). There are also observations that if the Trump administration, which is on the defensive in public opinion, takes sudden action, it could shock the stock market.
Jung Hee-chan, a research analyst at Samsung Futures, noted, "What is noteworthy is that despite other corporations continuing record-high net purchases last month, a box-range pattern emerged in the KOSPI market." He added, "As the supply and demand player that has been supporting the lower bound of the index by absorbing selling volume from foreign and retail investors disappears, there are high concerns that the support base will weaken."
Research analyst Jung stated, "Samsung Electronics' earnings announcement is expected to be the most important event for the domestic stock market this month." He added, "The concretization of the shareholder return plans announced by Samsung Electronics and SK Hynix is also an important variable. While the market expects specific plans to be disclosed after the earnings announcement, attention is focused on whether they can partially buffer the supply and demand gap following the end of share buybacks."
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