Why KOSPI Can't Break 7,000 Despite Heavy Foreign Buying: Shareholder Returns, Robotics, and Shipbuilding Trends

Investors are showing caution over external uncertainties that could emerge during the holiday, including developments in the Middle East.

Kim Min-su, CEO, explained this sentiment: "When there's a holiday coming up, the market gets cautious. What if something happens in the Middle East during the break? There's just a vague sense of unease. That's how it feels when we take an extra day off."

Investors widely share the view that this zone will be hard to clear, and buying interest tends to weaken as a result.

Kim Min-su emphasized the importance of the 7,000 level: "Right now, 7,000 is exactly where the trend resistance sits. Everyone says we'll push through, but it's right here. We figured it wouldn't be easy to get there, and then it just gets knocked back down, which is frustrating."

The KOSPI is currently showing a "holding pattern," where it struggles to break above 7,000 but also isn't easily dropping below the mid-6,800 range. This suggests the market lacks clear upward momentum, though downward pressure isn't strong either.

Kim Min-su described the current movement: "We can hold, but the pattern right now is that the black line is hard to break below. People in the market feel the mid-6,800 range is difficult to lose."

Foreign investors have bought domestic stocks for three consecutive days, which seemed to send a positive signal. At the same time, they have taken short positions in the futures market, capping index gains. This conflicting movement shows that opinions on the market's direction are divided even among foreign investors.

Kim Min-su explained: "Foreigners have been buying for about three days, so they're trying to buy stocks aggressively. The players are starting to change. But not all foreigners are the same. Some of them don't like where the market is heading, so today futures are being pressed hard."

Overseas memory chip companies such as Sandisk and Micron Technology have announced strong shareholder return policies, and their stock prices are gaining momentum. Meanwhile, Samsung Electronics and SK hynix are constrained by comparatively weak shareholder return policies. Samsung Electronics has said it will return 50% of free cash flow (FCF) to shareholders, while SK hynix has yet to present a concrete plan.

Kim Min-su said: "Looking at the strong momentum at Sandisk and Micron Technology, Samsung and hynix just can't keep up. That's really the only reason. Those companies say they'll put everything they earn toward shareholders, and their stocks cheer. We offered 50% for Samsung, but hynix hasn't said anything at all about shareholder returns. So what would anyone buy in that situation?"

The fundamental reason domestic investors prefer the U.S. market over Korea's is said to be a difference in companies' understanding of capitalism and their commitment to shareholder returns. U.S. companies actively pursue shareholder-friendly policies when they generate profits, while domestic companies are comparatively passive.

Kim Min-su remarked: "The reason people say they can't do Korea anymore and want to go to the U.S. is that understanding of capitalism is higher there, and there's a clear difference in how companies say they'll act when they earn money."

This is far above the roughly 50% that domestic memory companies have committed to return.

Kim Young-min, PD, said: "Some overseas memory companies say they'll return up to 100% of FCF, and they've already started share buybacks. As you mentioned, domestic memory companies have committed to around 50% of FCF. That's better than before, but there are still some shortcomings."

Domestic semiconductor companies are seen as losing investment appeal compared with overseas rivals in how they treat shareholders. While overseas companies aggressively push shareholder value through share buybacks and dividend increases, domestic companies are described as taking a relatively passive approach.

Kim Min-su stressed: "If you measure it in dollars, Sandisk and Micron Technology could return amounts close to their market value. If they buy back shares, lock them up, and pay more dividends, investors naturally start looking there."

While some AI-related companies are rising, they make up only a small share of the overall market, so they are not seen as attractive alternatives for institutional investors managing large sums.

Kim Min-su said: "In Korea, there's really no software to buy. Sure, if big tech goes up, companies like Saltlux, Selvas AI, and Maum AI will rise too. But that's just a small part. For large capital, the big-picture approach has to be to ride along with something larger."

This is interpreted as the minimum level needed to match market consensus. Samsung has said it will return 50% of FCF, but brokerages are calling for even more aggressive return policies.

This level of expectation reflects the market's high bar for shareholder value, and attention is focused on what kind of shareholder return policy Samsung will present next. The prevailing view is that more proactive efforts are needed to narrow the shareholder return gap with overseas rivals and raise investment appeal.

Kim Young-min, PD, said: "Expectations are high not only at KB Securities but also at Daishin Securities, which published a report yesterday. Roughly, both firms say the company needs to offer something on the order of 100 trillion won to meet what the market is currently looking for in consensus."

The Treasury Secretary signaled strong measures against Iran, which is again heightening geopolitical unease in the Middle East. Such statements could lead to greater oil price volatility and rising global economic uncertainty, so investors need to stay alert.

Rather than concentrating only on stocks like Samsung Electronics or SK hynix that have already surged, it may be more effective to turn attention to the next sectors with room to rise, such as robotics and automobiles.

Kim Min-su advised: "Now that the market has stabilized somewhat, you should watch how rotation is playing out. If you're thinking in terms of rotation and you have some cash, then buying Samsung or hynix is fine. But once those rise, you won't sell them anyway, since you'd be stuck. Still, the money will move to the next sector. Robotics and autos haven't risen yet, so they'll rotate in. Look at the large-cap stocks and see which ones have lagged. Then go there."

Breaking through this level is seen as necessary for the next leg up. The market is placing high hopes on Hyundai Motor's Investor Day, scheduled for late August. Expectations are high that the event will bring specifics on Boston Dynamics, including its position, production plans, and mass production plans.

In particular, if Hyundai shows strong commitment to raising Boston Dynamics' value, that is expected to have a positive effect on the stock. If additional news, such as a big tech company taking a stake in Boston Dynamics, is announced, the stock could gain momentum for an even larger rise, analysts say.

Kim Min-su said: "Looking at Hyundai Motor, it has just barely cleared the resistance zone. The resistance is at 450,000 to 465,000 won, so investors are watching closely there. To level up and move on, when is the Investor Day? Late August, around the 20-something. At that event, Hyundai will almost certainly present its stance on Boston Dynamics, its future production plans, and its mass production plans. If there's something extra on top of that, and they show real commitment to raising Boston Dynamics' value, that's when the story will really take off."

Even a stake of around 3 to 5% is seen as a positive development that could give Hyundai Motor's stock strong upward momentum.

Kim Min-su said: "If that happens, and they start letting out news like a 3% or 5% stake, that will be a value-raising move. By then, Hyundai Motor should climb steadily. If that kind of news comes out, the next resistance zones could be 550,000 to 580,000 won, so that's worth watching. The key is to clear 465,000 won first. Once that's breached, the stock can run. Hyundai Motor tends to move fast once it's attached to robotics, so we need to watch for that."

Kim Min-su recommended: "Given Hyundai Motor, what should you trade? Look at stocks like Autowaver. Autowaver has settled above resistance all at once today. If it just moves sideways here without falling much, it could run up quickly. In the U.S., the story is about building a value chain centered in the U.S. starting with actuators and reducers. SPG is the strongest stock right now, getting support and climbing repeatedly. Hyundai Mobis is also good, since it's trying to break the upper end of its range. If you're looking at affiliates or Hyundai parts suppliers, Korea Friction is my favorite. It's already been decided, and it had a good pullback. Once bracket actuator parts for Boston Dynamics start getting shipped, it should get more attention."

If the participation of a big tech company becomes visible during the pre-IPO process, Hyundai Motor Group and related component stocks could gain significant momentum.

Kim Young-min, PD, said: "From my search, Investor Day looks to be scheduled around August 26. It's worth checking that. What I agree with from what you said is that I think it's fairly likely that overseas big tech companies will become visible as stake participants in Boston Dynamics. So if that comes out during the pre-IPO process, Hyundai Motor Group and component stocks could move significantly."

This question reflects investor interest in the outlook for domestic shipbuilding orders and future prospects. It suggests that an in-depth analysis of the sector's recent trends and future value is needed now.

Kim Young-min, PD, asked: "Yes. Shipbuilding looks good today. Recently there have been reports that the U.S. sent out some kind of SOS, so what's your take on the shipbuilding sector?"

Within the shipbuilding sector, Korea Shipbuilding & Offshore Engineering (KSOE) is seen as a stock that could rebound quickly, since it has fallen sharply since listing and its share price has been roughly halved. The one-year anniversary of its listing in August is expected to help resolve lock-up share issues, which could have a positive effect on the stock.

However, analysts say it is more advantageous to buy in the pullback zone around 54,000 won rather than chasing the price now. They see room to rise up to the mid-to-late 60,000 won range, the first resistance level, and stress that a good buying timing is when trading volume supports the move.

Kim Min-su explained: "Shipbuilding stocks tend to move most when they've dropped a lot. Take Korea Shipbuilding & Offshore Engineering. After listing and once most of the share supply was cleared, now that it's August and about a year since listing, the lock-up shares should mostly be resolved around this time. The stock was around 90,000 won and has nearly halved. So as it climbs back, it tends to move faster. But don't chase it now. It's showing resistance here. It may go up once and then pull back, and the better place to enter is when it dips to the low 54,000s and the pullback ends. After the first resistance is cleared, the next prior high should be around the mid-to-late 60,000s. The key is to watch the timing. When you see volume come in and it looks like it's really going, that's when you should act."

Hanakarbon posted strong second-quarter results, with operating profit rising about 60% from the prior quarter to the 50 billion won range, yet its share price showed no reaction at all. In contrast, Nongshim jumped more than 10% after its earnings release, showing a clear divergence among earnings-driven stocks.

This shows that good earnings alone do not guarantee a share price rise, and that price reactions can vary depending on the sector in focus or supply and demand conditions. Some argue that a buy-and-hold approach can work for shipbuilders over the long term, but short-term entry timing should be approached with caution.

Kim Min-su said: "I was looking at Hanakarbon earlier, and it came out pretty well. (Kim Young-min, PD: It isn't moving.) Yes. Second-quarter operating profit was about 50 billion won, up 60% from the prior quarter. (Kim Min-su: Hmm.) And there's no reaction at all. Earlier, I saw Nongshim, which posted good results today, rise more than 10%. I'd never seen that before. Nongshim is up 11% right now. Companies with good results do react today, but some don't. Shipbuilders are still a buy-and-hold story, but today is the wrong timing, so I'd pass today."

Clio rallied strongly after its earnings release, nearly hitting the daily upper limit, and drew a positive market response. Meanwhile, Silicon2 plunged the day after its earnings release, then surged again the next day, a volatile move that clearly illustrated the distinct characteristics of the domestic market. Such moves leave investors wondering how to respond to share price volatility after earnings.

Kim Min-su described the unpredictable flow of the domestic market critically: "Why is the market like this? Why does it make people act this way? Yesterday's earnings were good, so why is it falling? So you sell because it's falling, and then right after you sell, it rebounds. (Kim Young-min, PD: This is) a crazy market. Yes, you're all watching how well the K-market can lure in and throw around stocks with good earnings, like a judo flip or a throw."

This suggests that the domestic market often moves more on short-term supply, demand, and sentiment than on rational earnings analysis. Investors need to understand these characteristics of the "K-market" and adopt strategies that respond flexibly to rapidly changing conditions.