KOSPI Records Slight Decline Amid Samsung Electronics' Plunge; Opportunities for Sector Rotation Emerge

On August 24th, Samsung Electronics' stock price plummeted by about 8%, significantly impacting the market. However, excluding Samsung Electronics' decline, the overall KOSPI index fall was limited to 0.5-0.8%, confirming the overall market's downside rigidity. Kim Jang-yeol, expert, stated, "Samsung Electronics fell more than expected, but if you take out Samsung Electronics' 8%, and assume it accounts for 25% of the index, the market fell by about 2%. If you exclude Samsung Electronics and some of SK Hynix, the market dropped by 0.7-0.8% based on KOSPI." He pointed out that Samsung Electronics' individual issues might exaggerate its impact on the index.

The pharmaceutical and bio sector showed strength, boosted by news of Hanmi Pharmaceutical's large-scale technology export. Hanmi Pharmaceutical recorded a daily limit gain after exporting its pipeline for muscle loss prevention and obesity treatment to a global pharmaceutical company for 3 trillion won. Lee Kwon-hee, expert, explained, "Hanmi Pharmaceutical hit the upper limit, and its technology export involved a pipeline we had for preventing muscle loss. That obesity treatment was exported to a global pharmaceutical company for 3 trillion won, leading to this surge." This served as a factor that improved overall investment sentiment in the sector due to positive news from an individual company.

Samsung Electronics' announcement of a 110 trillion won shareholder return policy was assessed as falling short of market expectations. Kim Jang-yeol, expert, analyzed that the lack of a confirmed amount and specific treasury stock cancellation plans heightened investor disappointment. He commented, "Fundamentally, if they declare a 110 trillion won dividend and shareholder return policy, although the confirmed amount wasn't released, when considering that at least 110 trillion won or close to it would come out, that itself didn't seem like a cause for disappointment." He implied that uncertainty, rather than the policy itself, was the problem.

Samsung Life's 8.6% stake in Samsung Electronics emerged as a potential sale issue due to restrictions under the financial industry separation law, which limits ownership to over 10%. Kim Jang-yeol, expert, predicted that because any stake exceeding 10% must be sold under the law, new issues could arise in conjunction with Samsung Electronics' future treasury stock buybacks. He stated, "Samsung Life is the problem. Life insurance currently holds an 8.6% stake in Samsung Electronics. According to the financial industry separation law, they cannot hold more than 10%. So, anything exceeding that must be sold, which could lead to another sale issue."

An analysis suggests that if Samsung Electronics' shareholder return policy is strengthened, its fair stock price, based on dividend yield, could rise significantly. Kim Jang-yeol, expert, estimated that if Samsung Electronics were to pay 30 trillion won in dividends each quarter, totaling 120 trillion won annually, the dividend yield would reach 6.7%. In this scenario, considering only dividends, the fair stock price could rise to approximately 265,000 won. He emphasized the importance of dividends by stating, "If they pay 30 trillion won every quarter, that's 120 trillion won a year, isn't a 6.7% dividend yield good? If it ends with just dividends, since 6.7% has newly emerged, isn't the stock price going up to about 265,000 won?"

Samsung Electronics and SK Hynix show timing differences in their shareholder return policies. Samsung Electronics presented a cumulative 127 trillion won shareholder return plan over three years, setting its return cycle at 4-6 years. In contrast, SK Hynix's shareholder return policy timing is relatively later than Samsung Electronics', with a return cycle set at 5-7 years, allowing for more flexible responses. Lee Kwon-hee, expert, explained, "Samsung is 4, 5, 6. Hynix is 5, 6, 7. So, whether they'll do it for 6 or 7 years is up to them." These policy differences can also affect the stock performance of each company.

The sharp decline in Samsung Electronics and SK Hynix was primarily attributed to large-scale selling by foreign investors. As foreign capital inflows shifted towards the KOSDAQ market, the downtrend in large semiconductor stocks accelerated. Particularly for Samsung Electronics, it is analyzed that market disappointment over the announced shareholder return policy led to foreign selling. Lee Kwon-hee, expert, commented, "You can see it as an expression of dissatisfaction with Samsung Electronics' dividend policy," revealing that the market's negative reaction was reflected in the stock price.

Hanmi Pharmaceutical secured a massive 3.2 trillion won deal by exporting its obesity drug technology to Genentech (a subsidiary of the Roche Group). This technology is particularly related to a muscle loss prevention pipeline, generating significant market expectations. This contract sparked positive investment sentiment across the pharmaceutical and bio sector, driving up related stocks. Lee Kwon-hee, expert, emphasized the significance of this achievement by stating, "Hanmi Pharmaceutical exported obesity drug technology to a company called Genentech, and the scale of this is 3.2 trillion won." This large-scale technology export once again proved the technological competitiveness of domestic pharmaceutical and bio companies.

As high interest rates in the U.S. persist and the prospect of further rate hikes remains unclear, uncertainty surrounding investment in the pharmaceutical and bio sector is growing. Lee Kwon-hee, expert, mentioned that the current macroeconomic environment is not comfortable, stating, "The macro environment is not comfortable, not smooth yet." This could affect the fundraising environment for pharmaceutical and bio companies, suggesting a cautious approach to investment timing is needed.

Rising gold prices led to an overall increase in non-ferrous metal prices because gold and silver are byproducts of the zinc refining process. Lee Kwon-hee, expert, explained the connection between gold prices and non-ferrous metals, saying, "First, when gold prices rise, gold and silver come out as impurities during the zinc refining process. So they accumulate." Consequently, aluminum and copper-related stocks also showed concurrent strength, drawing attention as new rotation targets. This is analyzed as a result of safe-haven sentiment influencing metal prices amidst macroeconomic uncertainty.

Anticipation for the Clarity Act has led to a scheduled discussion of the relevant bill on September 15. This bill is attracting market attention as it could potentially lead to lower interest rates by increasing demand for treasury bonds. Lee Kwon-hee, expert, emphasized the importance of this bill, stating, "That is the key, the Clarity Act, and it seems there is some anticipation for it." The possibility of the Democratic Party pushing this bill through a deal to counter the Trump family's crypto-related issues has also been raised.

The U.S. is moving to strengthen financial sanctions against Iran, attempting to cut off Iran's economic lifeline. Kim Jang-yeol, expert, likened this to the D-Day landings, stating, "The largest-ever financial offensive against an adversary will be waged, cutting off all economic lifelines. Iran will become an international pariah if it maintains financial and commercial ties." This could lead to Iran's exclusion from the international payment system and control over its imports and exports, potentially causing significant disruption to international markets, such as a surge in oil prices. The deepening conflict between the U.S. and Iran is escalating geopolitical risks.

Foreign investors further bought 694.7 billion won in the futures market, accumulating approximately 1 trillion won at the bottom. Lee Kwon-hee, expert, emphasized the foreign buying trend, stating, "Since they bought this much from the 100 million won level, they've covered all the buying from the negative 300 billion won level, so they ended up buying almost 1 trillion won at the bottom, I think." This movement is expected to act as a factor that enhances the market's defensive capabilities during an ascent or descent at the beginning of the next day's trading. Foreign futures buying is interpreted as a positive signal securing the market's downside rigidity.

The Chinese robot industry is growing rapidly with active government support. Kim Jang-yeol, expert, observed many companies participating in Chinese robot events, inferring massive government support. He stated, "There are many Chinese robot events. Seeing so many companies setting up booths makes me think they can't be making money, but the government must be supporting them enormously. This is because, looking at the U.S.-China value chain, there seem to be over 50 actuator companies alone." He further predicted that with 60-70% of Tesla Optimus parts being Chinese-made, the intensified U.S.-China tech competition and subsequent de-Sinicization of core components could create new opportunities for parts suppliers in the Hyundai Motor value chain. Hyundai Motor's stock outlook for 1-2 years was also positively assessed.

Despite Hyundai Motor's first 8-hour full strike in 10 years, Kim Jang-yeol, expert, analyzed that its long-term impact would be limited. He commented, "I don't consider the strike very important. After a full strike, they usually make up for it with weekend and overtime work." Citing past cases, he pointed out that production disruptions due to strikes can be sufficiently compensated through weekend and overtime work. Therefore, this strike issue is not expected to significantly affect Hyundai Motor's long-term corporate value.

Nvidia's announcement to increase server prices starting next January is analyzed to positively contribute to memory semiconductor price increases. Kim Jang-yeol, expert, stated, "Nvidia's server price increase is certainly positive. They said they would raise prices starting next January, so semiconductor prices won't drop during that time. It's positive." He predicted that the possibility of core component price reductions would decrease. However, the possibility of delayed market reaction due to changes in macroeconomic conditions like interest rates was also raised, indicating a need to closely monitor the overall market situation.