The KOSPI has surged, triggering the buy-side sidecar (futures market circuit breaker) for two consecutive trading days. This is due to SK Hynix's announcement of expanded shareholder returns amid easing concerns over AI profitability. Attention is now turning to whether this upward trend in the KOSPI can be sustained.
As of 10:54 a.m. on Tuesday, the KOSPI stood at 5,989.19, up 350.85 points (6.22%) from the previous trading day. The KOSPI, which opened with a rise in the 2% range, rapidly widened its gains during the session. The buy-side sidecar was triggered again, following the previous day.
What is driving the KOSPI higher is a series of positive news from AI company Anthropic. On the 26th (local time), Anthropic announced that it is moving forward with an IPO (initial public offering). On the 27th, U.S. semiconductor firm Broadcom announced that it has partnered with major financial institutions to raise approximately 8.35 trillion won in funding required for Anthropic's semiconductor purchases.
The positive news regarding Anthropic has alleviated concerns over AI profitability, which had weighed on domestic and global semiconductor stocks and the KOSPI.
SK Hynix's announcement of third-quarter results meeting market expectations and its plan to expand shareholder returns also acted positively on the stock market.
SK Hynix decided to implement additional shareholder returns worth more than 6 trillion won through share buybacks and cancellations. The company plans to return the majority of the profits realized from its investment in Kioxia this year to shareholders. SK Hynix's total shareholder returns for this year are expected to reach 100 trillion won, including the 40th trillion won approved in August.
Samsung Electronics is also pushing forward with a shareholder return plan worth up to 110 trillion won this year. It is scheduled to present specific additional return measures through an earnings conference call on the 29th.
As of now, Samsung Electronics is up 8.56%, and SK Hynix is up 8.8%.
Experts in the financial investment industry expect that the expansion of shareholder returns by major semiconductor stocks will serve as a trigger to resolve the undervaluation of semiconductor stocks and the KOSPI.
"At this point, where record-high earnings for semiconductor stocks coexist with historical undervaluation, the unprecedented expansion of shareholder returns by Samsung Electronics and SK Hynix is expected to be a decisive factor in resolving undervalued corporate valuations," said Kim Dong-won, head of the Research Division at KB Securities.
However, analysis suggests that for the KOSPI rally to continue, concerns over AI profitability must be continuously resolved. Additionally, net buying by foreign investors in the domestic stock market must also persist from a supply and demand perspective.
"The market is continuing to verify funding sources for AI investment, making it difficult to be optimistic about a trend reversal based solely on expectations of shareholder returns," said Yang Hyeon-kyung, a researcher at iM Securities. "It is important to see whether the strength in semiconductors, including Samsung Electronics, is maintained after SK Hynix's announcement, and whether foreign buying continues."
Foreign investors are continuing to buy stocks on the KOSPI, following the previous day. The current net purchase amount by foreigners is 745.9 billion won.
The U.S. FOMC (Federal Open Market Committee) meeting scheduled for early morning on the 29th in Korean time, along with earnings releases from major U.S. tech companies, are also key factors influencing the stock market.
"The market will now be watching the October FOMC and earnings releases from Alphabet and Microsoft," said Han Ji-young, a researcher at Kiwoom Securities. "Since an FOMC hold is already a foregone conclusion, the key will be how Fed (Federal Reserve) Chair Kevin Warsh presents the possibility of a December rate hike and the expected pace of future Federal Reserve tightening through his press conference."
She added, "Meta, which reported strong earnings last week, has raised concerns about funding needs due to weakening cash flows and stock issuance, increasing sensitivity to the overall profitability of hyperscaler companies."
She explained, "It will also be important whether Alphabet's and Microsoft's earnings exceed consensus estimates, but growth rates in core business revenue, such as cloud services, and changes in FCF (free cash flow) appear to be crucial."
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