Walmart's Plunge, Treasury Buybacks, and Samsung Electronics' Choice

Despite a recent slowdown in the consumer price index (CPI) increase, most consumers still perceive prices as high. This is leading to a decrease in the real purchasing power of U.S. consumers. Baek In-yeop, Manager, stated, "Walmart's 9% drop indicates that individual consumers lack the purchasing power to spend due to high prices. Because of this issue, Walmart dropped 9%, and it's not just Walmart's problem; it suggests that purchasing power across the economy might be decreasing." He explained that Walmart's 9% stock price drop is evidence of this depletion of purchasing power. Walmart's plunge is not just a problem for one company but is spreading concerns about a broader consumption slowdown across the economy.

The U.S. Treasury announced an expansion of its buyback program as a way to curb rising long-term bond yields and improve market liquidity. It stated its intention to increase buybacks from the previous $2 billion to at least $4 billion. Although this is not significantly different from the amount mentioned by Treasury Secretary Janet Yellen, it is interpreted as a strong signal of the Treasury's commitment to market stabilization. This method differs from quantitative easing (QE). While QE simply increases the money supply by purchasing bonds, buybacks do not change the total amount of national debt.

The Treasury uses funds raised from issuing short-term bonds to purchase and then retire long-term bonds. This can lower short-term bond yields and suppress the rise in long-term bond yields, contributing to overall market interest rate stability. Baek In-yeop, Manager, emphasized the significance of this measure, explaining, "The Treasury announced an expansion of the buyback scale from $2 billion to at least $4 billion to enhance long-term bond liquidity. In fact, it's not very different from what Secretary Yellen mentioned, because 'at least $4 billion' means $4 billion or more." The Treasury's intervention aims to reduce market uncertainty and stabilize investor sentiment.

Samsung Electronics' shareholder return policy is highly likely to be affected by the Financial Industry Structure Improvement Act (Geumsan Act). Under the current Geumsan Act, the combined stake that Samsung Life Insurance and Samsung Fire & Marine Insurance can hold in Samsung Electronics is limited to a total of 10%. If Samsung Electronics were to buy back and retire its own shares, the total number of outstanding shares would decrease. If the number of outstanding shares decreases, the shareholding ratio of Samsung Life Insurance and Samsung Fire & Marine Insurance would inevitably increase relatively.

In this scenario, there is a risk that the combined stake of Samsung Life Insurance and Samsung Fire & Marine Insurance in Samsung Electronics could exceed the legal limit of 10%. Due to this legal risk, it is widely believed that Samsung Electronics will consider other forms of shareholder return policies instead of share buybacks and retirements. Baek In-yeop, Manager, explained, "Samsung Electronics is subject to the Geumsan Act. According to the Geumsan Act, Samsung Life Insurance and Samsung Fire & Marine Insurance can only hold a total of 10% of Samsung Electronics' shares. If treasury shares are retired, the total number of outstanding shares decreases. If the number of outstanding shares decreases, the shareholding ratio of Samsung Life Insurance and Samsung Fire & Marine Insurance must increase. That's why there's a lot of talk about paying dividends instead of buying back and retiring shares."

Therefore, it is highly likely that Samsung Electronics will opt for an increased dividend policy rather than share buybacks and retirements as a shareholder return strategy. This is considered a realistic alternative to enhance shareholder value while complying with Geumsan Act regulations. Dividend expansion provides direct returns to shareholders and can contribute to long-term corporate value improvement.

Recently, investor sentiment in the biotech market has shown a different pattern than in the past. Until late July, when positive news emerged from the biotech sector, stock prices often hit their upper limits or surged. However, currently, such positive news is not being properly reflected in stock prices.

For example, some companies like DND Pharmatech once saw rapid surges due to issues like re-presenting old clinical data, but quickly fell back, eroding investor trust. Baek In-yeop, Manager, pointed out, "When positive news came out from the biotech sector, especially from late July, stocks would hit the upper limit or surge, but these days, good news isn't having much effect." He analyzed that investors are no longer chasing news like moths to a flame.

Generally, a bull market refers to a period when positive corporate news or information is immediately reflected in stock prices. However, the current domestic biotech market is not showing these characteristics of a bull market. Baek In-yeop, Manager, highlighted the paradoxical situation in the domestic biotech market, stating, "There are times when news comes out and it's immediately reflected in stock prices – that's a bull market. But now, even with Olix, a technology transfer happened, and it's not going up, right?"

In particular, the domestic biotech sector tends to react excessively sensitively to movements in U.S. Treasury yields. Unlike the U.S. market, domestic biotech stocks react immediately to negative news with declines, but respond indifferently or passively to positive news, requiring investor caution.

AprilBio's clinical exclusion should be accepted as clear negative news. Some attempts were made to dilute the impact of this negative news by mentioning the possibility of developing other indications, but this argument overlooks the fundamental investment point. Baek In-yeop, Manager, stated, "Negative news is negative news. I think I organized something about AprilBio yesterday... If the investment point is damaged, then AprilBio should not be looked at for now. Isn't that the core?" He emphasized that when a company's core investment point is damaged, investors should take a wait-and-see approach for a while.

Currently, in AprilBio's case, institutional selling continues. This selling trend suggests that market participants are taking the negative news seriously. Therefore, investors must closely monitor these market movements and approach them cautiously. It is important to make investment decisions based on objective facts rather than attempts to dilute negative news.

Baek In-yeop, Manager, announced that he will host a free broadcast on YouTube this coming Sunday at 5 PM. During this weekend's free broadcast, he is expected to provide a market outlook for the next week and in-depth analysis of promising stocks. Baek In-yeop, Manager, encouraged viewer participation, saying, "On the weekend, it's at 5 PM. Sunday at 5 PM. The weekend free broadcast will be held on Sunday at 5 PM."

Additionally, MBN Gold is holding an event until August 24, offering an extra month of benefits for those who sign up for a 2-month VIP membership. This is expected to be a good opportunity for investors seeking professional investment information and strategies.