Samsung Electronics and SK Hynix Share Buybacks: Key Drivers for Index Defense and Market Rebound

Foreign investors recently showed a large-scale selling spree amounting to 3.9 trillion won, but Samsung Electronics and SK Hynix's share buybacks successfully absorbed this, acting as a major driver for today's market rebound. In particular, the 1.5 trillion won inflow of buying, identified as coming from these companies' share buybacks under the name of 'other corporations,' is analyzed to have strengthened the market's downside support. Expert Roh Gwang-min cited Samsung Electronics and SK Hynix's share buybacks as the sole factor that led to a dramatic index increase in today's market.

An analysis suggests that when considering investments in semiconductor materials, parts, and equipment (Soo-Boo-Jang) stocks, one should pay attention to the movements of Samsung Electronics and SK Hynix. Expert Roh Gwang-min emphasized that Samsung Electronics and Hynix play a central role in the market, and only when these large-cap stocks lead an upward trend can Soo-Boo-Jang stocks also rise. In other words, a standalone strong performance for semiconductor Soo-Boo-Jang stocks is unlikely, and Samsung Electronics' role in leading the overall market is crucial.

An opinion was presented that there is no need to be overly concerned about surging oil prices and rising interest rates due to geopolitical instability in the Middle East. Expert Roh Gwang-min predicted that if oil prices surge or interest rates rise above 5%, former U.S. President Donald Trump would attempt to calm the market through political statements. This political intervention, he argued, could alleviate excessive market anxiety and stabilize the market.

The consensus for Nvidia's earnings, to be announced this week, is high, with revenue expected to reach $91 billion. Expert Roh Gwang-min pointed out that past Nvidia earnings announcements showed a tendency for the stock price to decline short-term immediately after the announcement. However, he explained that after such short-term declines, the stock price has repeatedly risen again within one to two weeks, or even a month later. Therefore, he predicted a similar trend is likely to follow this earnings announcement.

Samsung Electronics is currently undergoing a 15 trillion won share buyback program and has reportedly purchased approximately 1 trillion won worth of its own shares over the past two days. Expert Roh Gwang-min predicted that at this pace, share buybacks of approximately 500 billion won per day could continue for the next month. This would provide continuous downside support to the market and is interpreted as a positive signal for investors regarding the stability of Samsung Electronics' stock price.

Despite SK Hynix initially planning its share buyback over three months, it has now purchased 600,000 shares in just four days, indicating a much faster pace than anticipated. This is interpreted as SK Hynix's intention to complete the share buyback within two months. This aggressive share buyback is analyzed to be providing downside support to the market and contributing to the stabilization of SK Hynix's stock price.

An analysis suggests that share buybacks are playing a crucial role in defending against index declines. It is explained that even in a falling market like today's, a circuit breaker was avoided thanks to share buybacks by Samsung Electronics and SK Hynix. Share buybacks successfully offset large-scale selling by foreign investors, effectively defending the index. This strong share buyback trend is expected to continue for the next one to two months, which is projected to be a major factor in preventing a significant market crash.

An analysis suggests that share buybacks generally tend to purchase more volume at lower prices. Expert Roh Gwang-min argued that in this situation, if foreign buying flows into the domestic market due to a surge in the Nasdaq, there is a possibility of a sharp rise in Samsung Electronics and SK Hynix stock prices. He emphasized that the time when foreign buying and share buybacks combine to drive a sharp increase in stock prices will come soon, and investors should wait for it.

Samsung Electronics Chairman Lee Jae-yong and SK Hynix Chairman Chey Tae-won show clear differences in their approaches to shareholder returns. Expert Roh Gwang-min categorizes Chairman Lee Jae-yong as a cautious manager who prefers shareholder returns primarily through cash dividends after confirming earnings. In contrast, Chairman Chey Tae-won is analyzed as a bold manager who tends to execute shareholder returns by preemptively canceling treasury shares based on earnings forecasts.

Furthermore, Samsung Electronics has limitations on treasury share cancellation due to the financial-industrial separation law, tending to focus on cash dividends. SK Hynix, on the other hand, appears to be attempting to enhance shareholder value through treasury share cancellation. In Samsung Electronics' case, there is also a possibility that the scale of cash dividends could further expand depending on the third-quarter earnings announcement.

The preliminary earnings of Samsung Electronics, to be announced in early October, are projected to be far more important than Nvidia's earnings in gauging future stock price trends. Expert Roh Gwang-min emphasized that the August export data, to be released in early September, will be a crucial benchmark for understanding the overall trend of the semiconductor market.

In particular, investors should carefully check Samsung Electronics' operating profit and cash flow, which are directly linked to shareholder return resources. These indicators are expected to be decisive clues for predicting whether Samsung Electronics' performance will improve and the direction of future shareholder return policies. Therefore, the preliminary earnings announcement of Samsung Electronics in early October is expected to be a key event that will significantly impact the domestic stock market, especially the semiconductor sector.