Why We're Not Buying Big Chip Names Today

Today's Mood

Trading resumed after a three-day holiday weekend, and the two indexes pulled in opposite directions. KOSPI opened above 7,000 but lost ground through the afternoon to close at 6,941.39, down 0.89%. KOSDAQ did the opposite, climbing 2.98% to 919.92 on strength in chip equipment and battery materials names, just short of the 920 line.

Indexes splitting isn’t unusual, but today’s gap was wide. Large caps sat out while small- and mid-cap growth names ran.

Checking Yesterday's Call

The last session’s piece (Oct 2) said to check three things by Oct 5. The holiday pushed that session to today, so here’s where things stand.

Foreigners still haven’t turned net buyers on KOSPI — they sold another 1.7689 trillion won today. The reaction to the September jobs report was calm: on report day itself (Oct 2), the Dow rose 0.49%, the S&P 500 0.73%, and the Nasdaq 1.19%, while the VIX dropped sharply and the 10-year yield rose only 0.04 percentage points. The next session (Oct 5) added more gains without any sharp moves. KOSPI held 7,000 on Oct 2 itself, but gave it back once trading resumed today.

Why KOSPI Slipped Below 7,000 Again

Two things stand out. One is pressure from US Treasury yields — the 10-year rose another notch, from 5.28% to 5.31% over the past two sessions, a macro headwind brokerages pointed to.

The other is large-cap chipmakers sitting on their hands. Samsung Electronics fell 1.45% ahead of its Oct 8 preliminary Q3 results, and SK Hynix dropped 3.69%. The semiconductors and semiconductor equipment group averaged a 1.97% decline, even though 122 of its 172 names actually rose — selling was concentrated in the two largest names.

Samsung, SK Hynix Watched the Calendar

Valuations on both names still look cheap. By Naver Finance consensus, Samsung Electronics has 80.1% left to its target price and SK Hynix has 84.8% (on estimated P/Es of 5.8x and 5.1x, respectively). Both still fell today anyway — we read that as brokerages wanting to see the numbers first, with Samsung’s Oct 8 preliminary results and a chip-ETF rebalancing both landing on the same day.

For beginners: P/E (price-to-earnings ratio) is price divided by earnings per share — the lower it is, the cheaper the stock looks relative to its profit. ‘Room to target’ shows how much higher a brokerage’s target price sits above today’s price; it’s the same gap read from the other direction as saying the stock trades below its target.

Photo: DrHughManning / Wikimedia Commons (BY-SA 4.0)

Battery and Robotics Led By Sector

KOSDAQ’s climb toward 920 reflected sector concentration more than a broad advance. Grouping the stocks we follow by sector, battery materials averaged a 8.27% gain, led by Ecopro BM (+11.41%). Robotics also rose, up 3.67% on Rainbow Robotics’ 3.67% gain.

On the other side, shipbuilding and defense averaged a 2.93% decline as Hanwha Aerospace fell 4.57%. The semiconductor group still closed up 0.76% on average, as Samsung Electro-Mechanics’ 5.95% gain offset declines at Samsung Electronics (-1.45%) and SK Hynix (-3.69%).

Jusung Engineering Led All Movers Today

The biggest mover among the stocks we follow today was Jusung Engineering, up 17.51% to 278,500 won. Trading value hit 874 billion won, among the heaviest on KOSDAQ.

Chip-equipment names have kept setting new highs on improving earnings and expectations of more DRAM investment, and today looks like a continuation of that run. HLB also jumped 17.18% and helped drive KOSDAQ’s gain, but its rally wasn’t chip-related — it was a drug approval. More on that below.

Today's Biggest Movers

Beyond Jusung Engineering and HLB, LG Innotek rose 12.20% to 644,000 won, Samsung SDI rose 8.70% to 575,000 won, and LG Electronics rose 7.64% to 232,500 won. Ecopro BM added 11.41%, adding to strength in battery material names.

On the downside, Hanwha Aerospace fell 4.57%, the steepest drop among the stocks we follow, and Samsung Biologics fell 3.25%. Gainers and losers were sharply split today.

Foreigners Sold KOSPI Again Today

Foreign investors sold a net 1.7689 trillion won on KOSPI today. Individuals and institutions absorbed the selling with net buying, and other corporate investors added 987.5 billion won, helping cushion the index. On KOSDAQ it was the reverse — foreigners and institutions bought while individuals sold a net 212 billion won. Foreign flows pulled in opposite directions across the two markets today.

Samsung, Shinhan Flows Split Yesterday

Stock-level flow data for today isn’t out yet, so this looks at the last session (Oct 2). That day, foreigners sold 359,442 shares of Samsung Electronics while institutions bought 614,278 shares — opposite directions. SK Hynix was similar: foreigners sold 115,492 shares while institutions bought 76,049.

Shinhan Financial Group saw a similar split — foreigners sold 96,054 shares, institutions bought 95,351, similar in size but opposite in direction. When the two sides move opposite ways like this, institutions are absorbing what foreigners sell, so individual investors aren’t left alone on the other side of the trade.

Wall Street Digested the Jobs Report

In the last session (Oct 5, US time), the Dow rose 0.18%, the S&P 500 0.66%, and the Nasdaq Composite 1.05%. That followed gains on the day the September jobs report landed (Oct 2), when the Dow rose 0.49%, the S&P 500 0.73%, and the Nasdaq 1.19% — two straight up sessions.

Treasury yields ticked up modestly: the 10-year rose from 5.28% to 5.31% and the 30-year from 5.63% to 5.66%, each up 0.03 percentage points — a mild move for a post-jobs-report window. The VIX stayed low at 15.52.

The Won Was Roughly Flat

The won closed at 1,342.6 per dollar, little changed from the prior session. That the currency barely moved even as US yields ticked higher suggests today’s foreign selling in Korean stocks hasn’t yet spilled over into real pressure on the won.

A Brokerage Sees a Q4 Rebound for Hyundai Motor

NH Investment & Securities cut its Hyundai Motor target price from 620,000 won to 540,000 won, expecting Q3 operating profit to miss consensus. The cut reflects roughly 55,000 units of lost production from a union strike and rising raw-material costs. It kept its Buy rating, though.

NH expects Q4 to improve as production normalizes and new models — the Ioniq 3 in Europe, the Grandeur hybrid and a redesigned Avante at home — help the sales mix. Hyundai Motor shares rose a modest 0.43% today.

Oct 8: Earnings and a Rebalancing Collide

Tomorrow (Oct 7) likely carries the same wait-and-see mood with no major catalyst scheduled. The real test comes the day after (Oct 8). Samsung Electronics reports preliminary Q3 results that day, with consensus looking for 201.7276 trillion won in revenue and 108.1312 trillion won in operating profit — which would be the first time quarterly operating profit has topped 100 trillion won.

The same day, 23.2 trillion won of domestic equity ETFs go through their regular rebalancing. Of that, 18.1 trillion won sits in chip ETFs, which are set to trim Samsung Electronics’ weight and add to SK Hynix and chip-equipment names. With earnings and a flow shift landing on the same day, how today’s idle large-cap chipmakers react then should set the tone for KOSPI next week.

Worth Watching Today

Photo: Timofey Radkevich / Unsplash

LG Electronics signed a long-term supply agreement with North American cooling specialist Air Control Concept to provide high-efficiency chillers and cooling solutions for a 5 gigawatt (GW) AI data center buildout. Industry estimates put the deal’s value in the trillions of won, reportedly LG Electronics’ largest B2B supply contract to date.

LG Electronics’ AI data-center cooling orders already topped 600 billion won in the first half of this year, and this contract could pull forward the company’s 2027 target of 1 trillion won in chiller-business revenue. Shares rose 7.64% today.

Photo: Trnava University / Unsplash

Elevar Therapeutics, HLB’s US subsidiary, won FDA approval for Rivfloza (rivoceranib/lirafugratinib), a treatment for bile-duct cancer — the first time a Korean pharmaceutical or biotech company has won US approval for a global oncology drug.

The same day, a routine FDA inspection of the manufacturing site for the liver-cancer drug rivoceranib closed with a Voluntary Action Indicated (VAI) classification, easing uncertainty around the facility and signaling that a resubmission may be close. HLB shares rose 17.18% today, and affiliate HLB Biostep hit its daily upper limit.