Foreign Buying Inflows, KOSPI 'Golden Cross' Imminent… Long-Term Investment Opportunity in Focus

CoreWeave's earnings announcement was very positive, especially its guidance and projected future revenue. The key point was that H100 GPUs can be operated long-term, through 2029 or 2030. Previously, in asset-backed securities systems that lend against these chips, asset value was considered to be depreciated after two to three years, but the outlook that they can be used for up to ten years reversed sentiment. A100 GPUs are still in good use today and are trading at high prices in the secondhand market.

After the earnings release, CoreWeave rose 19% during the regular session, and Nebius, which has a high share of European data centers, surged 34% after announcing before the market opened. Strength among neocloud companies has been notable. In addition, optical communication company Lumentum rose 13% and Coherent rose 8.2%, with AI infrastructure-related stocks showing broad strength.

Concerns had been mounting about neocloud companies, but CoreWeave's results also appear to ease worries about companies like Oracle. The market is shifting its view toward 'it's different from what we feared.' This is expected to act as a positive signal for the memory semiconductor market as a whole.

After the U.S. market closed, Korean market-related indicators all rose. The EWI, an ETF investing in Korean stocks, rose 5%, KOSPI night futures rose 3.29%, and the Philadelphia Semiconductor Index rose 2.49%. As AI infrastructure-related stocks showed strength, Nvidia rebounded 3%, SK hynix ADR rose 9%, Micron rose 4.9%, Seagate rose 7%, Sandisk rose 5.76%, and DRAM rose 7%. Rebounds were larger for memory-related companies that had previously fallen sharply. All the stocks mentioned, except Broadcom, recorded gains.

Stocks such as CoreWeave, Nebius, Lumentum, and Coherent are showing good momentum. This trend is expected to have a positive effect today on neocloud, optical communication, and domestic semiconductor-related companies. As a result, expectations for improved earnings at domestic companies are growing further.

Yesterday's moves by foreign and institutional investors were intriguing. Foreign investors bought Samsung Electronics for a large 1.4 trillion won, the first such purchase in a while, and SK hynix for 845 billion won. Institutions bought SK hynix for 280 billion won and Samsung Electronics for 190 billion won, and also bought the same stocks as foreigners, including Samsung Electro-Mechanics, LG Electronics, and SK Square, in a pattern that looked like 'colluding.' On the KOSDAQ, they bought a wide range of stocks, including Jusung Engineering, Rainbow Robotics, IPS, and LigaChem Bio GNC, while cosmetics stocks such as Silicon2 and Cosmecca Korea, and semiconductor materials and parts companies, were also bought heavily. Silicon2 in particular surged along with its earnings announcement.

He said this suggests that expected earnings improvement next year is not reflected in share prices at all, and that there is significant room for valuation re-rating going forward. He also noted that interest in earnings improvement remains strong.

Samsung Electronics' operating profit is projected to increase about ninefold year over year, and SK hynix's sevenfold. Combined operating profit for the two companies in 2027 is expected to approach 1 quadrillion won, and continued re-rating is expected accordingly. In particular, the shareholder return policy serves as a powerful catalyst to attract long-term capital inflows from sovereign funds such as Temasek and the Abu Dhabi Investment Authority, as well as global mega funds. If Samsung Electronics carries out its expected shareholder returns of 8% per year relative to market capitalization, it would offer returns far higher than bank deposits, attracting long-term investment. If this shareholder return policy continues, foreign investor inflows are expected to accelerate further.

Samsung Electronics' share price began surging three days ago, and during this period foreign investors concentrated their buying in Samsung Electronics even though they were selling SK hynix. The key keyword behind this shift is analyzed to be the shareholder return policy. Samsung Electronics has pledged to return 50% of the free cash flow (FCF) it generates over three years to shareholders, which is expected to total roughly more than 130 trillion won. This clear shareholder return policy appears to have played a decisive role in drawing in large-scale buying from foreign investors.

Samsung Electronics' shareholder returns are calculated based on 50% of FCF, so the forecast is relatively clear. For SK hynix, by contrast, returns are paid out after excluding capital investment from this year's earnings, so the exact amount is hard to predict. Expectations for SK hynix's shareholder returns are therefore high, but since the concrete calculation is not easy, uncertainty remains.

Some argue that dividends should be large due to individual shareholder issues, but taxes on dividends could be a stumbling block. If dividends are received in multiple stages, the tax burden could leave the actual amount received lower than expected. For this reason, expanding shareholder returns through treasury stock cancellation is also being discussed. Canceling treasury stock reduces the number of shares and raises value per share, which can have a positive effect on shareholders. Expectations therefore also exist for treasury stock cancellation rather than dividends.

Cosmetics-related companies have recently posted surprise earnings, drawing market attention. Yesterday, Silicon2 and Korea Kolmar announced strong earnings and their share prices rose sharply. Such strong results are raising positive expectations for the cosmetics industry as a whole. Silicon2 in particular surged and drew high interest in the market.

Securities stocks have declined substantially recently, but positive prospects are emerging. Discussions on extending trading hours are underway, and Nextrade, which has already extended its trading hours, is seeing sharply improved earnings. Beyond Nextrade, government securities transaction tax revenue is also reported to have increased enormously, about four to five times. These environmental changes are expected to work very favorably for securities stocks and are raising expectations for securities firms' earnings improvement. Securities stocks are therefore currently undervalued, but are likely to rebound in the future.

While the U.S. market's annual return is only about 10%, KOSPI has posted an annual return of more than 50% this year despite a significant correction. Based on this data, the analysis rebutted the view that KOSPI is in a downtrend, emphasizing that it has suffered a strong correction but not a fundamental downtrend. This suggests that investors should guard against excessive pessimism and focus on the market's potential for recovery.

The market created the pretext for yesterday's rebound well, and given the positive reaction in the U.S. market, it is reasonable to view the downtrend as having ended. If today's close is completed, a 'golden cross' in which the 5-day moving average breaks above the 20-day moving average is virtually certain. This signifies that a short-term trend reversal has occurred, and the market mood is likely to turn positive. Investors therefore need to watch this trend change and plan their strategy accordingly.

The golden cross is cited in stock textbooks as an important trend reversal signal, referring to a phenomenon in which a short-term moving average breaks above a long-term moving average. The occurrence of this technical indicator is acting as a factor making the outlook for Samsung Electro-Mechanics' share price positive. Its strength is therefore interpreted as being driven by these technical signals.

Japan's stock market has already seen a golden cross and has escaped its downtrend. KOSPI is expected to enter a golden cross today, and the KOSDAQ already recorded one on August 6. The occurrence of these golden crosses means the downtrends in each market are ending and are highly likely to turn into a short-term uptrend. Positive investor sentiment is therefore expected to spread across the domestic stock market as a whole.

Candles often give 'false' signals because of temporary movements, and prices can break through and then fall back down. Moving averages, on the other hand, represent average prices over several days, so a break above a moving average is reasonably seen as a short-term trend reversal. Analysis based on moving averages was therefore emphasized as important for reliable trend judgment.

This is estimated at roughly 7,300 to 7,500 on the index. Some resistance and correction may occur in this range, so a strategy of taking profits or reducing position size at that point is needed. In particular, it was suggested that it would be wise to trim the quantity added through averaging down. This approach should help lock in gains and manage risk once the short-term target price is reached.

The change in foreign investors' buying may mean that new foreign capital has come in, or that existing hedge funds have obtained information that Korean stocks will rise and switched to buying. The fact that such rumors are spreading means that the perception that Korean stocks are undervalued and 'cheap' is spreading. A mood is forming that this is an attractive time to invest compared with the past, and this is seen as an important change that will further encourage foreign capital inflows.