Samsung Electronics Stock Plunge: Unexpected Reasons and Counter-Strategies

Key factors for stock price increases include growth in EPS (Earnings Per Share) and an increase in the PER multiple. These can be more effective when combined with growth in a company's core business profits and shareholder return policies such as treasury stock cancellation. Specifically, EPS growth directly reflects a company's profit-generating ability, while the PER multiple indicates how highly the market values a company's future potential.

One of the main reasons the Korean stock market receives low multiples is the strong cyclical volatility of the semiconductor industry. Due to these industry characteristics, there is a strong perception that consistent profits are difficult to generate, and companies tend to hold excessive cash in preparation for future uncertainties. Furthermore, a lack of fulfillment by companies of their promises regarding shareholder returns and treasury stock cancellation is cited as a significant reason for failing to gain investor trust.

The rapid growth of the AI industry is creating new trends that differ from past semiconductor cycles. The movement of big tech companies to continuously expand capital expenditure (CAPEX) next year supports these changes. Increased orders for hyperscaler companies and the concentration of profits in specific semiconductor companies like those manufacturing HBM (High Bandwidth Memory) suggest that the semiconductor industry in the AI era will follow a different growth trajectory than in the past.

Over the past 20 years, the number of listed stocks in Korea has more than doubled, whereas in the U.S., the number of stocks has remained almost identical to that of the early 2000s. In Korea, owner families often issued shares at high prices, diluting existing shareholder value, which led to a decline in overall market confidence and resulted in the KOSPI index halving. This contrasts sharply with overseas companies like Apple, which enhance shareholder value through share buybacks and cancellations.

Treasury stock buybacks must lead to cancellation to have a positive effect on EPS. Particularly, buying and canceling treasury stock when the stock price is undervalued is much more advantageous than buying when it is expensive. The larger the cancellation volume, the more EPS rises in a compound manner, which is essential for restoring shareholder trust and increasing long-term corporate value.

The recent initiation of shareholder return policies, such as treasury stock returns and dividends, by chaebol companies is interpreted as the beginning of positive change. If these policies are not one-off but continuously implemented, investor trust in companies can be restored. This could have a positive impact on the overall KOSPI market, potentially creating a new upward trend.

Currently, the KOSPI's PER (Price-to-Earnings Ratio) is around 5x, placing it in an undervalued range. If corporate earnings do not sharply decrease next year, there is room for the PER to rise to its normal level of 8x. If shareholder return policies such as treasury stock cancellation and increased dividends are strengthened, leading to a multiple rerating, foreign capital inflow could push the PER to 9-10x, potentially leading to breaking previous highs. Shareholder returns will act as a key driver for this ascent.

September is traditionally a period where concerns about temporary liquidity tightening arise due to tax payments. However, this year may unfold differently from this historical trend. The U.S. government's cash balance is sufficient to proactively spend funds, and continued government fiscal execution is expected to ease market liquidity constraints. This suggests that a severe liquidity crisis like in the past will not occur.

The current AI ecosystem has a vertically integrated structure with tightly linked cash flows, and U.S. government fiscal spending acts as a major support. Hyperscaler companies and the U.S. government are leading AI-related expenditures, injecting vitality into the entire AI industry. Therefore, the analysis suggests that as long as money liquidity is maintained, there will be no major adverse events for the AI market.

The current market is predicted to show an upward trend with volatility rather than a sustained decline. Therefore, instead of buying when the stock price is rising, a phased buying strategy during correction periods to lower the average cost is advantageous. Buying whenever the stock price drops and enjoying profits during a rebound is a more effective way to reduce risk and maximize returns than chasing purchases when prices rise.

Recently, project financing methods are actively being utilized in data center construction projects. This approach involves lending based on the project's future profitability rather than the company's own creditworthiness. Projects like Oracle's data center construction are prime examples, and such methods are emerging as effective funding sources for large-scale infrastructure development.

To become an investment master, it is important to adhere to three principles. First, a strategy of minimizing losses when wrong and holding purchased stocks for a long time is necessary. Second, avoid leverage or excessive loans to pursue stable investments. Third, maintain principled investing by clearly recording in an investment journal why you bought, under what circumstances you will sell, and for how long you intend to hold the stock. Such records help reduce emotional judgments and facilitate rational decision-making.

During the Nasdaq correction period in 1999, many individual investors repeatedly sold in anxiety every time the stock price dropped by 10% and bought again when it rose, leading to frequent trading. As a result, individual investors failed to generate substantial profits, while institutional investors achieved long-term returns through a 'Buy and Hold' strategy. Therefore, if the investment thesis has not changed, it is important to hold long-term without being swayed by short-term market volatility and selling impulsively.