Foreigners Buy Samsung Electronics Again…Raise Semiconductor Weighting

The market is currently going through a painful stretch amid index swings, but this is interpreted as a positive signal that, if investors hold on near the bottom, overall conditions could improve. Lee Ji-hwan said, "Medium- to long-term foreign capital has started coming in over the past two or three weeks."

Among global macro variables, the US government bond yield has stopped its surge and turned downward, while oil prices fell sharply over two days amid possible economic sanctions. This decline in bond yields and stabilization of oil prices are expected to act as positive catalysts for stocks. Lee Ji-hwan explained, "A drop in bond yields or oil prices is good news for the market anyway." This could create conditions for market gains when short-term momentum emerges.

Powell did not mention specific policy matters at this event in the past, and given the style of Kevin Warsh, the nominee for Fed chair, no major policy announcement is expected this time either. Lee Ji-hwan said, "The Jackson Hole meeting itself can reveal the Fed's direction, but it isn't a place where the Fed chair talks about specific policy."

Nvidia's recent earnings report was so solid that it was hard to find any weakness. In particular, strong sales in the data center segment stood out, suggesting that hyperscalers' capital expenditure remains robust. Nvidia successfully defended its revenue guidance by raising product prices by 15%, which the market viewed positively. Lee Ji-hwan assessed, "This time it was actually quite difficult to find a weakness in Nvidia's earnings report."

Accounts receivable are commonly known as unpaid sales, and they inevitably grow as revenue increases. While collection period matters for receivables that once contributed to earnings declines, Nvidia's current receivables collection period is around 60 days, a normal level, so analysts say the company is not failing to collect its payments. Lee Ji-hwan stated, "If sales grow, accounts receivable naturally grow too, and accounts receivable are, in common terms, unpaid sales."

In the memory semiconductor market, the standing of Samsung Electronics and SK hynix is shifting, and Samsung's share in the HBM (high-bandwidth memory) supply chain is expected to expand. As Nvidia's operating margin and gross margin decline, forecasts suggest memory chipmakers' operating margins will overtake those of Nvidia and TSMC. Lee Ji-hwan explained, "In memory semiconductors, Samsung Electronics and SK hynix are on top, and operating margins have fallen below Nvidia's, and TSMC's has fallen too," emphasizing the change in the memory industry's standing.

A Politico report triggered concerns that the Trump administration may impose comprehensive tariffs on semiconductors, but analysts say this is unlikely to cause real damage. Looking at cases such as Hyundai Electric and other power equipment makers, tariffs are used as a card for pressure and threats, and even if imposed, no one comes out ahead. The semiconductor tariff issue is therefore likely a political card to pressure companies into investing in the US. Lee Ji-hwan noted, "Tariffs are now being used as a card of pressure and threat, and actually imposing them doesn't help anyone."

The factories currently have only their outer shells, while the installation of internal equipment and actual production stages are delayed. Semiconductor production cannot be completed in a short time, so operational delays are expected to continue for the time being. Lee Ji-hwan described the situation: "The completion schedule keeps getting delayed and factory progress is very slow."

Foreign investors sold 10 million Samsung Electronics shares over two days and then bought back 5 million. This suggests a short-term mechanical sell-off overlapping with long-term capital flows. Unlike mechanical selling that reduces positions in response to changes in corporate fundamentals, long-term capital inflows are expected to continue given the scale of shareholder value enhancement. Lee Ji-hwan analyzed, "Those who reduce positions because they think fundamentals have changed seem to be cutting mechanically."

Although the market is in an uptrend, the flow is polarized, with more falling stocks than rising ones. Medium- to long-term foreign capital is flowing heavily into semiconductors and large caps, with strong buying concentrated in specific stocks. Lee Ji-hwan said, "The stocks that medium- to long-term foreigners are buying are very narrow, because they keep buying the same stocks." This reflects foreign investors' strong intent to buy specific stocks based on price attractiveness. Individual investors should recognize this polarization in foreign flows and approach the market with a medium- to long-term view rather than short-term rotation. The narrowness of foreign buying may drive gains concentrated in particular sectors and large caps rather than broad market activation, so individual investors should be careful in stock selection.

Stock selection criteria in the power equipment sector are changing. Last year, growth momentum was the key investment criterion, but this year valuation based on earnings has become more important. From the perspective of foreign investors, there is a clear preference for stocks with stable fundamentals, earnings, and attractive prices over those with strong short-term momentum. Lee Ji-hwan analyzed, "Last year growth momentum mattered a lot, but now foreigners will likely prefer stable fundamentals, earnings, and prices over strong momentum."

This suggests that judging price against earnings using PER (price-to-earnings ratio) is necessary, and that the favorable stock may change as the market shifts. Lee Ji-hwan said, "If you held LS Electric last year, Hyosung Heavy Industries would be more favorable this year. This year, it may be more advantageous to mix in Hyundai Electric and Hyosung Heavy Industries."

When semiconductor stocks undergo a major correction, there may be a temptation to rotate into KOSDAQ stocks, but the advice was that holding on during this period is the better strategy. Market conditions can foster psychological anxiety, but unless one is a short-term trader, it may be advantageous to guard against this temptation and keep holdings. Lee Ji-hwan stressed, "Since you've been holding a large amount of semiconductors, this is the time when the temptation to move to KOSDAQ comes, but wouldn't it be better to hold on even more when that temptation arises?"

Lee Ji-hwan explained, "If the current price level has been reached, the PER benchmark is met, long-term contracts are coming in, and overall demand for next year's hyperscalers is confirmed, shouldn't you at least sell around October?"