Samsung Electronics and SK Hynix closed the first trading day of October with gains, pushing up the KOSPI index. Positive results from U.S.-based Micron and other factors helped ease pessimism about the semiconductor industry outlook. The securities industry is closely watching supply and demand dynamics as a short-term turning point following the conclusion of share buybacks by the two major semiconductor stocks that have supported the market.
According to the Korea Exchange on the 1st, foreign investors net sold 2.15246 trillion won worth of shares in the KOSPI market last month, while retail investors net sold 1.41971 trillion won. Institutional investors' net purchases amounted to only 438.93 billion won. In effect, other corporations (net purchases of 3.13988 trillion won) absorbed the large volume of selling pressure.
Other corporations is an account that aggregates trading results of general companies excluding financial institutions. Although its daily net trading volume was small and it had been classified as a minor supply-demand player, it has served as a "volatility support" by making net purchases ranging from 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) (temporary suspension of program trading), which was triggered 49 times this year, has not been activated since the share buybacks began.
The issue is that the share buybacks by the two major companies are nearing their end. Samsung Electronics, which disclosed plans to acquire 53.29 million shares in August and placed orders for 2 million shares per trading day, is expected to conclude its purchases on this day. SK Hynix, which announced plans to acquire 24.07 million shares and purchased between 600,000 and 650,000 shares daily, is predicted to place its final orders around the 15th to 17th.
Concerns are growing as a series of stock market events are scheduled after the supply support disappears. Immediately, Samsung Electronics' preliminary earnings release for the third quarter is expected on the 8th, which coincides with the domestic options expiration date. ETF (Exchange-Traded Fund) rebalancing is also scheduled to take place on that day.
Jeon Gyun and Shin Su-han, researchers at Samsung Securities, stated, "The scale of ETFs undergoing regular rebalancing this month is 2.1 trillion won for semiconductors, 160 billion won for secondary batteries, and 600 thousand won each for robotics and nuclear power, totaling 2.3 trillion won." They added, "Considering the holiday, actual rebalancing will likely be concentrated on the 8th, so attention needs to be paid to potential supply-demand conflicts."
Around the scheduled end of SK Hynix's share buyback, the release of U.S. September CPI (Consumer Price Index) and PPI (Producer Price Index), the APEC (Asia-Pacific Economic Cooperation) 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 announcement is expected, the U.S. Federal Open Market Committee (FOMC) meeting is scheduled to take place.
Jung Hee-chan, a researcher at Samsung Futures, noted, "A point worth noting 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-demand player that has supported the lower bound of the index disappears, there are high concerns about the weakening of the support base." Researcher Jung cited the concretization of shareholder return plans by Samsung Electronics and SK Hynix as a key variable, stating, "The market expects specific plans to be disclosed after earnings announcements, and attention is focused on whether this can partially buffer the supply gap following the end of share buybacks."
Meanwhile, the KOSPI index rose 1.95% to 6,971.35, while the KOSDAQ index rose 4.48% to 894.29 on this day. The gains widened as the trading session progressed toward the close. Positive factors included Micron's "surprise earnings" release for June through August and strong South Korean exports in September. This led not only to strength in Samsung Electronics (2.79%) and SK Hynix (3.21%), but also to a surge in KOSDAQ materials, components and equipment stocks.
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