Investors are keenly observing Samsung Electronics and SK Hynix, the two leading companies by market capitalization on the KOSPI, to determine if their recent upward stock price movement will propel a year-end “Santa rally.” These companies, having traded within a certain range for a considerable period, are now showing signs of potentially becoming key drivers of market growth.
Resurgence of Semiconductor Leaders
On the 8th, Samsung Electronics witnessed a 1.01% increase, closing at 109,500 Korean won. Notably, during the trading session, the stock briefly reached 110,000 Korean won, a level unseen since October 4. SK Hynix, initially displaying weakness, rebounded strongly to close at 577,000 Korean won, marking a substantial 6.1% increase and contributing significantly to the KOSPI’s overall positive performance.
These domestic semiconductor giants were instrumental in pushing the KOSPI above the 4,000 mark earlier last month. However, after reaching a peak, their stock prices experienced a downward correction. The recent resurgence follows a period of stagnation attributed to concerns surrounding a potential “AI bubble” in the United States. Since the beginning of this month, Samsung Electronics’ stock has risen by 8.6%, while SK Hynix has increased by 7.2%, signifying a renewed investor confidence.
Foreign Investment Fuels the Rally
Analysts suggest that the recent upward momentum is largely driven by net buying activity from foreign investors. This month, Samsung Electronics has emerged as the top target for foreign net purchases, with a total of 1.1506 trillion Korean won worth of shares acquired. SK Hynix secured the third position, attracting 206.6 billion Korean won in foreign net purchases.
This trend marks a significant shift from the previous month when foreign investors were net sellers of these large-cap stocks. In November, SK Hynix experienced the highest foreign net selling volume at -8.7309 trillion Korean won, followed by Samsung Electronics at -2.2292 trillion Korean won. The current shift towards net buying indicates a change in investor sentiment and renewed interest in these semiconductor leaders.
The Dawn of a Memory Supercycle
The securities industry anticipates that the memory semiconductor market is entering a “supercycle,” which is expected to fuel sustained growth for both Samsung Electronics and SK Hynix. According to Han Dong-hee, a researcher at SK Securities, the demand for memory products is expanding rapidly across various segments, including:
- High-bandwidth memory (HBM)
- Server DRAM
- eSSD
This surge in demand is attributed to the full-scale AI cycle. With limited supply capacity, suppliers are expected to maintain a dominant position, leading to significant improvements in earnings. Cha Yong-ho, a researcher at LS Securities, highlights that the DRAM industry is experiencing unprecedented demand strength amidst limited expansion. This situation is expected to provide Samsung Electronics with a supply advantage in HBM by expanding its general-purpose DRAM production capacity.
Potential Volatility from Big Tech Earnings
Despite the positive outlook, some analysts caution that upcoming earnings reports from global big tech companies could introduce volatility into the market. Oracle and Broadcom are scheduled to release their results on the 11th and 12th, respectively. If these earnings fall short of expectations, concerns about an “AI bubble” could resurface, potentially triggering stock adjustments.
Seo Sang-yeong, a researcher at Mirae Asset Securities, emphasizes the importance of Oracle’s upcoming earnings in demonstrating sustainable growth with secured margins. The market’s reaction to these earnings will be crucial in determining whether the recent rally will continue or if a pause is imminent. The performance of these tech giants will either alleviate concerns and allow the market to continue its upward trajectory, or it will trigger a period of uncertainty and potential correction.
