KOSPI sold off 4% early, then recovered as foreigners sold and institutions bought

Today's mood

A session that was down more than 4% at the low ended slightly higher. It opened under pressure from a sharp fall in U.S. tech stocks overnight, but news that Solidigm, SK Hynix’s U.S. subsidiary, was shelving its U.S. listing plan pulled chip stocks back and erased the drop.

The index is back where it started, but the inside is different. Foreign investors sold on KOSPI while institutions bought, and KOSDAQ fell 1.62%.

Yesterday's checkpoint: half held

Yesterday’s piece named two things to check: whether KOSPI would close above 5,533.77, and whether foreigners would net buy on KOSPI for a third day.

The first held. KOSPI closed at 5,550.30, 16.53 points higher. The second missed. Foreigners ended their two-day buying streak and turned to net selling. The index rose, but institutions rather than foreigners held it up, which is not the condition we set.

Wall Street shook things first

KOSPI opened at 5,403.17, down 2.36%, and the early low was 5,305.98, more than 4% below yesterday’s close. Korea Economic Daily noted that doubts about how long AI spending can continue were still there.

With good reason. Overnight the Nasdaq Composite fell 2.60% and the Philadelphia semiconductor ETF fell 6.79%. Meta lost 6.98%, Micron 6.26% and Intel 8.04%. Stocks tied to memory and AI spending fell together.

SK Hynix turned on the Solidigm news

SK Hynix fell more than 5% early on, then closed up 4.42% at 1,277,000 won. The turn came when it said Solidigm would halt its U.S. listing process. Yonhap reported that the company cited changed market conditions, and Korea Economic Daily said the move eased worries about a double listing.

Brokers saw it as a help to sentiment. Kiwoom Securities analyst Han Ji-young expected the halt to improve sentiment toward chips. Meritz Securities analyst Kim Sun-woo said the company has made shareholder value its priority, and that with valuation near a historic low, stronger shareholder returns could produce a real rebound.

SK Square also rose 3.20% on the same news, and Samsung Electronics gained 0.47% to 215,500 won. The morning looked different, though. Top 1% traders at Mirae Asset Securities sold SK Hynix more than any other stock in early trading.

Foreigners sold and institutions bought

On KOSPI, foreigners net sold 973.8 billion won, while institutions net bought 868.8 billion won and retail investors 35.5 billion won. That count is the provisional 16:22 figure. Korea Economic Daily’s after-close count put foreign net selling at 1.0938 trillion won, with institutions buying 795.5 billion won and retail investors 233.6 billion won.

So the answer to the rebound is institutions. They absorbed what foreigners sold and wiped out the drop. On KOSDAQ, foreigners sold 41.4 billion won and institutions 25.4 billion won, and only retail investors bought, 63.5 billion won, while the index fell 1.62%.

Beginner note: net buying is the amount bought minus the amount sold. A negative number means selling was larger. Foreigners trade in large size on the Korean market, so a rebound that foreigners keep selling into is often seen as hard to sustain.

Samsung E&A: earnings and a share cancellation

Samsung E&A rose 7.94% to 59,800 won, the biggest move among the stocks we follow, and it made the day’s top-trading-value list.

The catalyst is the third-quarter result reported yesterday. Asia Economy reported revenue of 2.9105 trillion won, up 45.8%, and operating profit of 500.6 billion won, up 183.6%. The company raised its operating profit target for the year from 800 billion won to 1.4 trillion won and its order target from 12 trillion to 19 trillion won.

Shareholder returns were large too. It will buy about 780 billion won of its own shares from today through January 22 and cancel 690 billion won of them. Money Today reported that 16 brokers raised their target prices in two days, including NH Investment & Securities from 80,000 to 86,000 won and Shinhan Securities from 68,000 to 79,000 won.

Samsung Biologics lifted the pharma group

Samsung Biologics rose 7.71% to 1,466,000 won. Pharma was also the best industry group at 2.24%, but of its 174 stocks only 47 rose and 108 fell. One large stock did most of the work in the group average. Samsung Life added 1.45%.

It is hard to name a single reason. Edaily mentioned an expectation that Solidigm’s halt could ease double-listing worries but did not call it the direct cause. The earlier catalyst was an October 19 court ruling that blocked union action at key processes. The union has said it will appeal and has announced a general strike from the 26th, so Monday’s session tests that factor again.

Photo: Louis Reed / Unsplash

Battery and defense stocks fell hard

On KOSDAQ, Ecopro BM fell 5.50% to 92,800 won, Jusung Engineering 3.64%, Rainbow Robotics 3.42% and Alteogen 2.81%. On KOSPI, Samsung SDI lost 4.20% and Doosan Enerbility 3.57%.

While chips rose, other growth groups were pressed together. On a day when the index is held up by a few large chip and biotech names, the headline number looks better than the market felt.

Industry groups

Across 79 industry groups, pharma rose 2.24%, semiconductors and equipment 1.76% and construction 1.49%. In semiconductors and equipment, 63 of 173 stocks rose and 106 fell, so most stocks fell even though the group average rose. A few large stocks lifted the average.

On the other side, aerospace and defense fell 4.06%, electrical equipment 3.87%, chemicals 3.65% and nonferrous metals 3.58%. In aerospace and defense, 26 of 35 stocks fell.

Banks slid for a second day before earnings

KB Financial fell 3.29% and Shinhan Financial 2.44%. Both also fell more than 1% yesterday, so this is a second straight weak day. There is no clear stock-specific news behind it; in shape, the day looks like money leaving financials while the index leaned toward chips.

The next checkpoint is earnings. Shinhan reports on October 27 and KB on the 29th. On Naver Finance consensus, price to this year’s expected earnings (PER) is 7.0 times for Shinhan and 8.3 times for KB, and target prices sit 56.9% and 43.7% above current prices.

Two things to check Monday morning

First is the U.S. session on Friday night: whether chips extend this week’s drop or settle decides Monday’s KOSPI open. Second is the Samsung Biologics union’s strike announced from the 26th, which tests whether the 7.71% gain holds. After that, SK Hynix’s October 27 result will show whether a concrete shareholder-return plan follows the Solidigm news, and that decides whether the chip rebound can continue.

What our research turned up

On Naver Finance consensus, price to this year’s expected earnings (PER) is 3.6 times for SK Hynix and 4.7 times for Samsung Electronics. Brokerage target prices are 155.1% above the current price for SK Hynix and 129.8% for Samsung Electronics.

The fact that SK Hynix still looks cheap after a 4.42% gain means today’s rebound did not change where the stock sits by much. These targets rest on the assumption that AI spending keeps growing, and on a night like last night that assumption wobbles.

Hanmi Semiconductor reported today. Next week brings SK Hynix and Shinhan Financial on October 27, Samsung Electronics on the 28th, Samsung Electro-Mechanics, KB Financial, Hyundai Motor, HD Hyundai Heavy, Hanwha Aerospace and Celltrion on the 29th, and Kia and APR on the 30th.

In a market that leans on two chip stocks, these reports can set direction. Because Solidigm’s news raised hopes for shareholder returns at SK Hynix, we will also watch whether concrete plans appear.

Sources

• Korea Economic Daily Korean-language article
• Asia Economy Korean-language article
• Korea Economic Daily Korean-language article
• Asia Economy Korean-language article
• Money Today Korean-language article
• Korea Economic Daily Korean-language article
• Korea Economic Daily Korean-language article
• Edaily Korean-language article