Don't rush into the rout: conditions for a recovery in Samsung and Hynix shares

The host asked Shin what strategy investors should adopt in this kind of sharp sell-off.

In the US stock market, the CPI reading came in above expectations, with particularly strong upward pressure from energy prices. Core CPI also exceeded forecasts, but comments that the effect was temporary led international yields to fall intraday.

Anthropic announced a 10-year investment worth $70 billion, but concerns that it was conditional came to the fore. Weakness in US chip stocks spread to domestic market weakness.

This could be a time to buy on the dip, but there is no need to rush in. There are issues to watch through November, so the prudent approach is to wait until some of the uncertainty is confirmed.

She also pointed out that the fear of being on a sinking ship is weighing on investor sentiment.

As of yesterday, Samsung's stake had declined further to 46.18%.

Foreign ownership of SK Hynix also fell from 49.59% at the weekend to 49.12% yesterday. The gap in foreign flows was cited as a major cause of KOSPI's weakness.

The concentration is such that Samsung and SK Hynix make up more than 80% of KOSPI.

Some argue that the two companies must announce measures to restore trust if foreign investor sentiment is to recover.

Shin expressed confidence in a recovery, citing Samsung Electronics' quarterly operating profit exceeding 100 trillion won.

Samsung Electronics completed its share buyback on October 6, and Hynix ended its own yesterday. Many investors expect additional year-end return measures given record earnings. Samsung's buyback ended on October 6 and SK Hynix's also ended yesterday.

The view is that many investors are expecting return measures to come by year-end.

Net buying by other corporations in Hynix is nearing completion, with more than 90% of the benchmark already reached, Shin explained.

With the flows that had been supporting the downside essentially gone, the ability to defend share prices has weakened. Shin added that Samsung posted record third-quarter results but its stock still performed poorly.

First is the outlook for global memory supply and demand from 2027 onward. Second is further progress on new long-term supply contracts that could affect the outlook.

Third is the concrete detail of shareholder return policy needed to bring foreigners back and defend the floor.

A report was cited saying SK Hynix will announce additional shareholder returns at its third-quarter earnings release. Shin's view is that while earnings are strong, this is a point where trust in shareholder returns has been secured.

According to August disclosures, Samsung Electronics will return 50% of cumulative free cash flow for 2024–2026, and SK Hynix 50% or more of cumulative free cash flow for 2025–2027.

As a result, its share price performed poorly.

By contrast, SK Hynix's share price rose after comments on share buybacks raised expectations for the conference call. Structural issues at Samsung, including the inclusion of preferred shares, were also raised, which generated some expectation.

Shin explained that a comparison table of company-by-company shareholder returns shows the return ratio to market cap is by no means low.

Apple focused on share buybacks backed by stable cash flow. Value-up took time but ultimately succeeded, according to assessments.

TSMC, like Samsung, is centered on dividends and holds to the principle of raising its dividend every quarter.

The key point highlighted is that consistent, sustained shareholder returns are earning investors' trust. Expectations remain that Samsung may offer concrete comments on share buybacks in its October 29 announcement.

The host said such a scenario is frightening even to imagine.

Many securities firms cite shareholder returns as the reason for foreign flows returning. The market is waiting for the October 27 and 29 announcements.

If the October 29 announcement mentions dividends but omits share buybacks, disappointment is possible. However, the share-buyback efficiency strategy remains, so expectations are seen lasting through next year.

With free cash flow excluding capex at record levels, the outlook is that shareholder returns will continue over the long term.

With foreign investors unresponsive and pension funds having little room to move, the host asked about a Plan B. The host raised the logic that if companies act, flows could return as in the US and Taiwan cases.

Shin answered that investors should not decide hastily and should watch the process as uncertainty is resolved.

She again stressed that she had said there was no need to rush in the morning.

Current self-sufficiency is 21% for AMD and similar, and 13% for GPUs, both low relative to the target.

The Philadelphia Semiconductor Index showed high correlation with the yuan's value. China is the largest importer of logic and memory chips, and its net purchases alone exceeded $10 billion in 2026.

A stronger yuan is interpreted as helping China's expanding AI funding and cost reduction. The US, as the largest crude importer, is also seen facing burdens from high oil prices and import costs.

It is explained that there is room for yuan strength and AI chip demand to be linked in the meantime.

The conclusion is that the yuan is one reference indicator among several for comparing chip share prices.

Shin agreed with this summary.