KOSPI Nears 7,000 Amid SK Hynix's 180 Trillion Won Shareholder Return Outlook, Semiconductor Stocks Strong

Today, the KOSPI index rose by 381 points, or 5.89%, closing at 6,852 points, moving closer to the 7,000-point mark. It recorded an even higher increase during intraday trading, and trading volume surged to the point where circuit breakers were triggered.

This upward trend represents an approximately 60% increase compared to the beginning of the year, demonstrating the strong recovery of the domestic stock market.

The KOSDAQ market started today with significant positive news that mRNA would be fully applied to cancer treatment. While expectations for related companies were high due to this news, the gains were somewhat sluggish due to a supply and demand imbalance leaning towards Hynix and Samsung Electronics.

Ultimately, the KOSDAQ closed up 16 points (1.99%) at 840.

While we have experienced a trend of falling interest rates over the past 20 years, current government bond yields are returning to levels seen before the 2007 Lehman crisis. This phenomenon is clear when analyzing interest rate trends over a long-term time series.

It suggests that psychological resistance to interest rate hikes is gradually easing, indicating a new phase that differs from the past trend of declining interest rates.

Japanese government bond yields are showing a different trajectory from those in other countries. Although Japan had maintained low and negative interest rates for a long time, there has recently been a very sharp increase in yields.

This is interpreted as a result of a complex interplay of changes in Japan's own economic situation, separate from the global trend of rising interest rates.

While U.S. 10-year Treasury yields continue to decline, South Korean government bond yields also rose to 4.4% yesterday, which was surprising, but then experienced a significant drop influenced by the U.S. rate decline.

South Korean 10-year government bond yields fell by nearly 8 basis points, while Japan's also decreased by 6 basis points.

Today, semiconductor-related stocks on the domestic market showed an overwhelming surge, rising by 10%. This was a major driving force behind the index's increase.

In contrast, bank stocks, which had previously shown the most stable performance, fell by 3.51%, indicating poor performance. This is interpreted as a result of market interest and demand concentrating on the semiconductor sector.

News has spread that Samsung Foundry will increase foundry prices by up to 15%. This is analyzed as an increase in Samsung Foundry's bargaining power due to the ongoing supply shortage at TSMC.

Meanwhile, a forecast emerged that Samsung Electronics' DX (Device eXperience) division, which includes its mobile phone business, will continue to operate at a loss for some time.

Samsung Electronics is scheduled to break ground on a new High Bandwidth Memory (HBM) line at its Onyang campus next month. This new line construction is expected to involve an investment of approximately 6 trillion won.

This is interpreted as part of Samsung Electronics' strategy to strengthen its competitiveness in the HBM market and expand its production capacity.

SK Securities hit its upper limit today. This reflects market expectations after news broke that it was selected as the lead underwriter for SK Hynix's share buyback.

Kumho Electric and Kumho Construction also hit their upper limits, reportedly surging for a somewhat irrational reason related to 'Kumho' being another name for 'Honam'. This phenomenon indicates irrational investment flows in the market.

Following SK Hynix's announcement of a 40 trillion won share cancellation, market expectations for Samsung Electronics' shareholder return policy have greatly increased. The market estimates that Samsung Electronics should implement shareholder returns of at least 70 trillion to 140 trillion won. Some articles today even mentioned up to 150 trillion won.

Market expectations are focused on share cancellation-oriented policies rather than dividends, and it is anticipated that at least 60 trillion won in shareholder returns will be needed to maintain a positive market reaction.

However, if expectations become excessively high, there is a possibility that the actual announced amount could lead to market disappointment.

Following the announcement of a 40 trillion won share cancellation, SK Hynix announced a new performance-based compensation policy that distributes excess profit sharing as cash and treasury shares. 40% of the excess profit sharing will be paid in cash, and the remaining 60% in treasury shares.

Of this 60% in treasury shares, 40% can be sold immediately, and 20% will be deferred and paid after two years. This is interpreted as an effort to strengthen employee compensation while diversifying shareholder return policies.

J.P. Morgan analyzed that SK Hynix could engage in an even larger scale of shareholder returns by next year than the currently announced 40 trillion won. J.P. Morgan Chase predicted that additional shareholder returns of at least 180 trillion won would be possible by next year.

This analysis is based on the forecast that SK Hynix's operating profit will continuously increase from 2025 to 2027, and its free cash flow (FCF) will expand by more than 50%.

The credit ratings of some companies, including Samsung Electronics, have been upgraded from BBB+ to A-. This means that these companies are now recognized as investment-grade companies.

The credit rating upgrade is expected to be very advantageous for future fundraising, such as bond issuance.

Following SK Hynix's announcement of large-scale shareholder returns, expectations for the size of Samsung Electronics' shareholder returns continue to grow. Today's articles are reporting related news with titles such as '100 trillion won era formalized,' and these expectations are anticipated to increase further.

Some shareholders are even mentioning up to 150 trillion won, influenced by these articles. However, such excessive expectations could lead to market disappointment if the actual announcement falls short of expectations, so caution is needed.

News has spread that Moderna's mRNA technology successfully completed Phase 3 clinical trials for cancer. This achievement is particularly significant as it succeeded in the oncology treatment pipeline.

Major investment banks, including J.P. Morgan, analyze that this success has secured a pathway for the expansion of the mRNA platform into cancer treatment, and predict that the scope of treatment will continue to expand to other cancer types in the future. This is expected to serve as a positive signal for domestic bio companies as well.

Asset management companies experienced a major transformation in their performance during the first half of this year. While the net income of companies with securities firms as parent companies decreased considerably, independent asset management firms like Timefolio, DS, Life, Taurus, and Must, which are not affiliated with securities firms, recorded tremendous profits and made significant strides.

This is attributed to the overall upward trend in the stock market combined with the flexible investment strategies of independent asset managers. Notably, an unusual situation occurred where smaller independent asset managers earned more profit than larger asset managers affiliated with securities firms.

According to a Goldman Sachs report, the emergence of artificial intelligence (AI) is having an immediate impact on the employment market across four major industries. A clear reduction in employment has been observed, particularly in call centers, software distribution, management consulting, and the advertising industry.

This suggests that the introduction of AI technology is accelerating automation of tasks in these industries, thereby reducing demand for human labor.

News has emerged that Xu Jiayin, the founder of Chinese real estate developer Evergrande, has been sentenced to life imprisonment. Such judicial risks in China are dampening Wall Street's investment sentiment towards China.

Major Wall Street private equity firms, including Blackstone, BlackRock, KKR, and Apollo, are reported to have made no new investments in mainland Chinese companies this year. This is interpreted as a significant sign that the economic decoupling between China and the United States is accelerating.