Samsung Posted a Record 107 Trillion Won Profit. Why Did KOSPI Fall Anyway?

Today's Mood

Samsung Electronics reported the first-ever 100-trillion-won quarterly operating profit by a Korean company this morning, but KOSPI did not celebrate. The index opened flat-to-slightly-up above the 6,800 level, then sold off through the afternoon to the mid-6,600s, closing down 2.62% at 6,625.93. KOSDAQ fell too, while the won barely moved against the dollar.

Checking Yesterday's Call

Yesterday’s article set today (Oct 8) as the check: the day Samsung’s preliminary Q3 results land on the same day as a chip-ETF rebalancing and options expiration, we’d watch whether KOSPI falls further below 6,800 and how Samsung Electronics and SK Hynix react.

The earnings beat: Samsung posted 107.4 trillion won in operating profit, 1.6% above the market estimate of 105.7533 trillion won (Hankyung). Yet KOSPI still failed to hold 6,800 and fell further, and Samsung Electronics (-2.42%) and SK Hynix (-2.44%) both dropped with it. Earnings and the stock price moved in opposite directions.

KOSPI Gave Back 6,800 Despite Record Earnings

KOSPI opened flat at 6,808.68, but the pullback widened through the afternoon. Foreigners and institutions both turned net sellers, and a late wave of selling pushed the index down to the mid-6,600s (Asia Economy). After two attempts to retake 7,000 last week, the index this time couldn’t even hold 6,800.

Samsung Topped 100 Trillion Won, But the Stock Fell

Samsung Electronics reported preliminary Q3 operating profit of 107.4 trillion won. Revenue came to 195 trillion won, sharply higher than a year earlier, with an operating margin of 55.08%. It’s the first time a Korean company has topped 100 trillion won in quarterly operating profit (Hankyung). The chip division (DS) drove the result, and Edaily estimated it alone earned around 110 trillion won. The mobile division (MX), by contrast, is estimated to have posted an operating loss of about 1 trillion won (Money Today).

Despite beating the estimate, the stock fell 2.42% to 262,000 won. Some analysts said concern over a possible ‘peak’ in chip prices got priced in first (Asia Economy).

Photo: Un ragazzo chiamato Bi / Flickr (BY-SA 2.0)

The Chip-ETF Rebalancing Landed As Scheduled

As flagged yesterday, today was the day seven chip ETFs (combined assets in the high-teens of trillions of won) went through their periodic rebalancing alongside options expiration (Seoul Economic Daily). Funds like TIGER Semiconductor TOP10 cap any single stock at 25%, and with Samsung over that cap, brokerages expected a mechanical sale of Samsung shares with the proceeds rotating into SK Hynix and other chip names (Seoul Economic Daily).

What actually happened today was a bit different. Not only Samsung, whose weight had to be trimmed, but also SK Hynix, which was expected to see inflows, fell together. The rebalancing didn’t change the direction of the money.

For beginners: an ETF ‘rebalancing’ means periodically resetting a fund’s holdings to match a fixed rule (for example, no single stock above 25% of the portfolio). Stocks over the cap get sold mechanically and stocks under it get bought, regardless of that day’s earnings or news.

Foreigners and Institutions Sold Again Today

On KOSPI, foreigners sold a net 1.9952 trillion won and institutions sold a net 1.6635 trillion won, while individuals alone bought a net 2.9045 trillion won (Naver Finance, provisional as of 16:22). According to Money Today, foreign net selling has now run for nine straight sessions — foreigners were already selling Samsung Electronics and SK Hynix the day before the earnings release.

Where Foreigners and Institutions Split Yesterday

Yesterday’s (Oct 7) flows showed several stocks where foreigners and institutions moved in opposite directions. Foreigners sold 79,006 shares of SK Square while institutions bought 95,041 shares, and foreigners sold 69,025 shares of Shinhan Financial Group while institutions bought 31,413 shares. SK Square, the one institutions had bought, fell 8.06% today — that buying didn’t last a single day.

Only Batteries Rose Among Our Sectors

Among the stocks we follow, only the battery group rose — LG Energy Solution (+2.56%) and Ecopro BM (+3.45%) both gained, for a sector average of +3.00%. Every other sector fell. Shipbuilding/defense was the weakest, down 6.17% on average, followed by biotech (-4.30%), financials (-3.78%), and autos (-2.98%). By the exchange’s own sector classification, biotechnology (-6.18% across 59 names, 38 of them lower) and aerospace/defense (-4.84% across 35 names, 28 of them lower) led the declines, while only small groups like stationery (+5.03%) and distributors (+3.34%) rose.

Today's Biggest Movers

Hanwha Aerospace fell 8.33%, the biggest drop among the stocks we follow. Shipbuilding and defense were weak across the board, and HD Hyundai Heavy Industries fell 4.0% too. SK Square dropped 8.06%, and Alteogen (-6.23%) and Samsung Biologics (-4.54%) followed biotech’s broader weakness. On the other side, two of today’s most actively traded newcomers, Daeduck Electronics (+4.23%) and Wonik IPS (+1.98%), rose.

Jusung Engineering Reversed Yesterday's Plunge

Jusung Engineering, which fell more than 11% yesterday, rose 8.08% today to close at 267,500 won. Its trading value of 992 billion won was the highest among the stocks we follow. With chip-equipment names swinging hard on earnings and flow headlines, this stock appears to have ridden that volatility the hardest.

KOSDAQ and the Won

KOSDAQ closed at 892.27, down 0.69% — a smaller drop than KOSPI’s. The won held essentially flat against the dollar at 1,340.6, per Hana Bank’s notice rate (-0.03%).

Wall Street Fell on Bond-Yield Pressure Overnight

Wall Street fell overnight as the 10-year Treasury yield climbed to 5.28%, weighing on sentiment: the Dow dropped 0.66%, while the S&P 500 and Nasdaq Composite each fell 0.22%. The Russell 2000 fell harder, down 1.31%, and gold (at $4,140.70 an ounce) dropped 1.11%. The pressure that rising yields put on valuations carried over into Korea’s market today.

Next Session Is Oct 12, After the Holiday

Markets reopen Oct 12 after the Hangul Day holiday on Oct 9. The key variables in between are whether foreigners and institutions keep selling, and where U.S. Treasury yields go. With the 10-year yield in the mid-5% range, a continued climb could pressure high-valuation sectors like chips and biotech again. If yields ease instead, or foreigners turn net buyers, Samsung Electronics and SK Hynix — which stayed under pressure today despite record earnings — are the stocks most likely to react first.

Why Brokerages Still Call Samsung Cheap

Naver Finance’s consensus puts Samsung Electronics’ target price 89.0% above the current share price (average of 36 analysts, as of Oct 8). Hankyung’s own tally, using its EpicAI tool to gather sell-side reports from the last 150 days, put the average target price at 498,125 won — 80.5% above the Oct 2 close of 276,000 won (Hankyung).

The spread across brokerages is wide, though. Korea Investment & Securities set a target of 650,000 won, while BNK Investment & Securities, which cut its rating to neutral, lowered its target to 270,000 won (Hankyung). Hankyung noted that chasing two stocks purely on the size of the gap to target price deserves caution.