Samsung Electronics and SK Hynix led the KOSPI to recover the 7000 level intraday on the 22nd as investors bought the stocks at historically low valuations. The index surged 6.20% during trading to reach 7166.00, supported by foreign investors' net purchases for three consecutive days totaling 2.622 trillion won. The recovery reflects improving investor sentiment after recent sharp declines pushed the semiconductor giants into what analysts describe as extreme undervaluation territory. Samsung Electronics closed 0.58% higher while SK Hynix finished 0.33% lower, though both failed to maintain the 7000 level at the close due to late-session selling by retail and institutional investors.
Samsung Electronics and SK Hynix Trade at Record-Low Valuations
Financial data provider FnGuide calculated Samsung Electronics' 12-month forward price-to-earnings ratio at 4.42x and SK Hynix at 4.73x as of the 21st. The KOSPI's forward PER dropped to 5.55x, falling below the 6.27x low recorded during the 2008 global financial crisis. The two companies' combined market capitalization represented 51.09% of the KOSPI as of the previous trading day, down 4.58 percentage points from the peak of 55.67% last month but still accounting for more than half of the index.
Foreign Investors Net Buy 2.622 Trillion Won
Foreign investors purchased 2.622 trillion won worth of Korean stocks on the 22nd, marking three consecutive days of net buying. From the 14th to the 21st, SK Hynix and Samsung Electronics ranked first and second among foreign net purchase targets. Semiconductor-related stocks including SK Square and Hanmi Semiconductor also appeared in the top rankings, indicating concentrated foreign buying in oversold semiconductor names.
Hana Securities Projects 15-25% Potential Return
Hana Securities compared the current market situation to recovery periods following the China Shock and Dubai Shock rather than the IT bubble. Lee Kyung-soo, researcher at Hana Securities, stated that foreign investors' recent net buying can be interpreted as the same signal observed during those recovery periods, when foreign buying and retail selling preceded index rebounds. Lee projected that if this trend continues, a 15-25% expected return over the next year is possible.
LS Securities Anticipates Sector Rotation After Semiconductor Rebound
Analysts expect semiconductor stocks with large declines to lead the initial market rebound. Lee Jae-man, researcher at Hana Securities, explained that in past rebound phases following sharp drops, sectors that led the previous bull market recorded returns higher than the index and tended to drive index recovery. However, Jung Da-woon, researcher at LS Securities, stated that while Samsung Electronics and SK Hynix-centered gains are expected initially, semiconductors' excess returns may not be as large as before, and sector rotation into underperforming stocks may occur as semiconductors' relative strength weakens. A securities industry official noted that while semiconductors remain the key sector determining KOSPI direction, the likelihood of repeating a rally driven solely by these two stocks is low, and healthy sector rotation into stocks supported by earnings and valuation will be a key variable for the second half.
FAQ
What caused the KOSPI to recover the 7000 level intraday on the 22nd?
Samsung Electronics and SK Hynix attracted low-price buying after falling to historically low valuations, with foreign investors net purchasing 2.622 trillion won worth of stocks for three consecutive days, driving the KOSPI to surge 6.20% intraday to 7166.00.
What are the current valuation levels of Samsung Electronics and SK Hynix?
As of the 21st, Samsung Electronics' 12-month forward PER stood at 4.42x and SK Hynix at 4.73x according to FnGuide, with the KOSPI's forward PER at 5.55x — below the 6.27x low recorded during the 2008 global financial crisis.
What is Hana Securities' outlook for the Korean stock market?
Hana Securities researcher Lee Kyung-soo stated that if the current foreign buying trend continues, a 15-25% expected return over the next year is possible, comparing the situation to recovery periods following the China Shock and Dubai Shock when foreign net buying preceded index rebounds.
