Samsung Electronics and SK Hynix Share Prices Diverge Despite Shareholder Return Policies…H2 Market Outlook and Strategy

Immediately after Samsung Electronics and SK Hynix announced their shareholder return policies, their stock prices showed significant volatility. Expert Lee Hyuk-jin pointed out the short-term market sentiment where positive news does not last, analyzing that the current market is not robust in terms of both supply-demand and sentiment.

In other words, the current market situation, where positive news does not have a lasting effect, is deepening investors' concerns.

Samsung Electronics was already returning approximately 50% of its free cash flow (FCF) as per its existing plan, so expectations for additional surprises were low. In contrast, SK Hynix had a possibility of significantly increasing its return rate from the previous 20% level, leading to surprise expectations.

Expert Lee Hyuk-jin explained that a paradoxical phenomenon occurred where the stock price fell despite high dividend yield expectations, interpreting it as a reflection of investor disappointment.

This stock price movement is attributed to the differing existing return policies of each company and market expectations.

Samsung Electronics faces structural constraints due to the financial-industrial separation law, which prevents Samsung Life Insurance and Samsung Fire & Marine Insurance from holding more than 10% of Samsung Electronics shares. Expert Lee Hyuk-jin explained that if Samsung Electronics repurchases its own shares, insurance companies would face pressure to sell Samsung Electronics shares to meet legal limits, leading to selling pressure.

This suggests that, unlike SK Hynix, Samsung Electronics' shareholder return policies may have limited effects on the market due to institutional constraints.

Regarding memory semiconductor investment strategy, Expert Lee Hyuk-jin advised prioritizing the reliability of the Price-to-Book Ratio (PBR) band over the Price-to-Earnings Ratio (PER). He recalled that in the past, at the end of a downturn, there was often advice to buy when the PBR band broke.

Considering the estimated asset value in 2027, the current period is likely a short-term bottom, so even with short-term fluctuations, increasing investment at the lower end of the band is an effective strategy, he analyzed.

Expert Lee Hyuk-jin predicted that the attractiveness of new entries into large-cap stocks, often called 'national stocks,' is decreasing, and there is a high probability that the market will be stock-picking until the end of the year. Accordingly, he suggested that lowering the market capitalization level by one step would be a better strategy for pursuing stock returns in the next week, next month, or within three months.

He emphasized the importance of identifying companies with growth potential and momentum among smaller market capitalization stocks, moving away from existing large-cap-centric investments.

This strategy is based on the judgment that market liquidity is likely to be dispersed into individual stocks.

It implies the need for an approach that seeks hidden value among small and medium-sized stocks rather than focusing on large-cap stocks.

Expert Lee Hyuk-jin stated that the current growth rate is exceeding forecasts, with a projected growth of mid-3% next year. He warned that this could increase the possibility of interest rate hikes, which could negatively impact asset markets, including self-employed individuals.

In other words, despite economic growth being a positive sign, he expressed concern that excessive growth could exacerbate inflationary pressures, leading to further tightening by the Fed.

Expert Lee Hyuk-jin analyzed that the Fed is trying to step away from market attention. He stated that the Fed's actions, such as reducing message delivery and stopping interviews, are aimed at allowing the government to procure funds at low interest rates to use for AI and CAPEX (capital expenditure) investments.

This is interpreted as the Fed's intention to minimize its impact on the market, thereby securing the government's discretion in economic policy.

The Treasury Department showed its intention to directly intervene in the long-term interest rate market by mentioning 'market making.' This is a statement that would have been unimaginable in the past, suggesting that the government will actively intervene in the market to stabilize long-term interest rates and even use buyback options.

Such direct government intervention is a measure beyond market autonomy and is expected to significantly impact long-term interest rate trends.

The government is pursuing a strategy to secure demand for short-term interest rate bonds by concretizing stablecoin implementation rules starting next January and utilizing them. The calculation is that by growing the stablecoin market and encouraging the purchase of short-term bonds, which are the underlying assets, short-term bond demand can be stimulated to defend interest rates.

This can be interpreted as a mini-QE (quantitative easing) measure, seen as an attempt to manage market liquidity in a new way.

Expert Lee Hyuk-jin analyzed that disinflation has progressed significantly for inflation excluding oil prices. He therefore believed that if oil prices stabilize, the Fed could potentially shift to a more accommodative policy.

Considering that capital raising costs are currently a key bottleneck for investment, an accommodative policy shift by the Fed could positively impact corporate investment activities.

The stability of oil prices is expected to be a major variable for future Fed policy changes.

Expert Lee Hyuk-jin assessed that the worst fears for the AI sector have passed. He cited the LLM (Large Language Model) token index rebounding for two weeks, increasing demand for frontier AI, and price increases by Chinese companies as evidence.

This suggests a positive turnaround for the AI-related market, implying new opportunities for investors.

Expert Heo Jae-moo analyzed that in the memory semiconductor industry, DRAM is expected to maintain a solid trend and continue to rise, but NAND flash shows slowing growth and uncertain supply-demand. The recent fall in Fadu's stock price was mentioned as a clear example of the market's differing preference for DRAM and NAND within the materials, parts, and equipment (SohBuJang) sector.

This suggests that investors need a differentiated approach to DRAM and NAND when considering memory semiconductor investments.

Investment decisions should be made by meticulously analyzing the market situation and outlook for each.

Expert Heo Jae-moo assessed that in terms of short-term supply-demand momentum, SK Hynix has an overwhelming advantage for at least 20 days. However, from a long-term perspective, Samsung Electronics, with its foundry competitiveness, is expected to perform better.

He explained that the long-term supply contract structure within the HBM (High Bandwidth Memory) market would influence this outlook.

Therefore, investors should make appropriate choices between SK Hynix and Samsung Electronics based on their investment horizon.

The analysis suggests that SK Hynix might be more advantageous for short-term gains, while Samsung Electronics might be better for long-term growth.

Expert Lee Hyuk-jin advised against excessively betting on a market decline. Observing the cessation of foreign net selling and the rebound in individual investor deposits, he analyzed that the volatility of large-cap stocks, which have a significant impact on the index, is shifting to individual company-specific bad or good news.

He believes that a sharp decline of 3-4% in the index is unlikely in the current situation, recommending a strategy focused on individual stocks rather than excessive pessimism.

Expert Lee Hyuk-jin proposed two individual stock attack strategies: 'empty house raid' and 'attacking oversold stocks.' 'Empty house raid' refers to analyzing the difference between the closing price on the day before listing and the current closing price for stocks that foreigners have sold off, or where individuals have used single-stock leverage.

He emphasized that when individual demand flows in, stocks that have fallen significantly tend to recover quickly.

These strategies are an approach to finding profit opportunities by utilizing temporary supply-demand imbalances in the market and the sentiment of individual investors.

Expert Lee Hyuk-jin presented a critical view on KOSDAQ Active ETFs. He pointed out that the top holdings of active ETFs were often problematic or underperforming, and it would be more efficient to buy index-tracking ETFs rather than tracking the top index stocks through such active ETFs.

In other words, he expressed concern that active ETFs might not generate the expected excess returns and could even perform worse than index-tracking ETFs.