SK Hynix Stock Surges After Announcing 40 Trillion Won Share Buyback…Samsung Electronics Also Expected to Expand Shareholder Returns

Immediately after SK Hynix's shareholder return policy announcement, its stock price hit the upper limit in after-hours trading. This led to a strong co-surge in semiconductor-related leveraged products, with Tiger Semiconductor Top 10 and KODEX Semiconductor Leverage rising by 8% and 7% respectively.

As of 2:40 PM on August 19th, additional buy recommendations were issued for semiconductor leveraged products. The strategy is to maintain a low-point accumulation strategy if the index falls, emphasizing expectations for shareholder return momentum issues at the end of this month. This strategy weighs heavily on the long-term growth potential of semiconductor stocks despite short-term market volatility.

SK Hynix has raised its dividend payout ratio to over 50% within the scope of 50% of cumulative free cash flow (FCF). This is interpreted as a heightened commitment to shareholder returns compared to before. The specific dividend amount is expected to be finalized around the end of October, when the third-quarter earnings are announced.

Following SK Hynix's shareholder return announcement, expectations for the scale of Samsung Electronics' shareholder returns are growing. This is because Samsung Electronics holds approximately 189 trillion won in cash, far more than Hynix's cash reserves. Consequently, it is expected that Samsung Electronics' shareholder returns will exceed those of Hynix. Some even suggest that Samsung Electronics' dividend yield could rise to 6-7%.

Currently, semiconductor stocks have sound fundamentals and are undervalued with a price-to-earnings ratio (PER) of around 5x. However, the absence of active buying from major purchasing entities such as individual investors, financial investment companies, and pension funds is preventing stock prices from rising.

A critical factor determining the market's daily trend is foreign investor demand. The intensity of foreign trading between 9:00 AM and 9:30 AM is particularly important. If foreign net buying is weak during this period, an increase in the index for the day may be difficult. Foreign investor demand is heavily influenced by the trend of the US NASDAQ index.

The current KOSPI market is not seeing a shift in leading stocks. Stock price increases relative to earnings are concentrated in semiconductor stocks such as Samsung Electronics and SK Hynix. This is causing relative stagnation in other sectors.

It is expected that Samsung Electronics and SK Hynix will lead the index trend for the next few years. If these companies maintain solid earnings, there will likely be no change in market leaders. The opinion is that other stocks lack sufficient market capitalization to drive the index.

Following SK Hynix's 40 trillion won share buyback, there is significant anticipation for a large-scale shareholder return policy from Samsung Electronics. If Samsung Electronics announces a shareholder return policy of 100 trillion to 150 trillion won by the end of this month, it is expected to have a major impact on the index's rise.

A statement was made about buying Samsung Electronics during the sharp decline on July 29th. This was based on the principle that if a leading stock is halved in two months, it will rebound. The rationale for the purchase was that unlike EcoPro, Samsung Electronics is a stock backed by solid earnings.

Samsung Electronics' stock price is expected to show range-bound fluctuations, with repeated sharp ups and downs, until the September earnings announcement. There is a high probability that the pattern of alternating large-scale foreign buying and selling will continue.

A strategy for dealing with Samsung Electronics' range-bound trading was proposed: buy at 220,000-230,000 won and sell at 300,000 won. Utilizing leveraged products to maximize profits was also emphasized. Trading using volatility is recommended over investing in a single stock.

Referring to SK Hynix's 40 trillion won shareholder return announcement, Samsung Electronics' shareholder return scale is expected to be twice that of Hynix, an 80 trillion won share buyback. This announcement is projected to come next week.

Currently, range-bound trading is considered effective. For Samsung Electronics' stock price to break through its high, large-scale net buying of over 10 million shares by foreign investors and institutions is required. The opinion was expressed that a breakthrough of the current range would be difficult given the current supply and demand situation.