Samsung Electronics and SK hynix Shareholder Return Expectations… Will Stock Prices Really Rise? | Kim Young-hwan, Yeo Do-eun, Heo Jae-mu [Morning N Investment]

Summary

NH Investment & Securities Senior Research Fellow Kim Young-hwan breaks down the Korean stock market with hosts Yeo Do-eun and Heo Jae-mu. He explains that the July selloff was largely driven by hedge fund deleveraging, not collapsing AI demand, and that hyper-scaler stocks have decoupled from memory chips due to peak margin fears. He argues that Samsung Electronics and SK hynix are deeply undervalued at 3–4x P/E and that credible shareholder return policies (buybacks) could trigger a first-stage rally, with rate cuts providing a second catalyst. For portfolio construction, he recommends a 60% allocation to memory chips and 40% to banks, shipping, oil refining, and visible-earnings food/beverage exporters and cosmetics.

• July selloff was amplified by forced hedge fund deleveraging, not a fundamental collapse in AI demand.
• Hyper-scaler earnings were solid, but memory chip stocks continued to lag due to fears of future investment cuts and peak margins.
• Long-term supply agreements (LTAs) could extend profit stability, but investors need proof.
• Samsung Electronics and SK hynix trade at P/E multiples as low as 3–4x with record earnings, making buybacks extremely accretive.
• Shareholder return announcements (buybacks) are seen as the most immediate catalyst for a first rebound; interest rate cuts would provide a second leg up.
• For the remaining 40% of the portfolio, banks, shipping, and oil refining benefit from high rates and oil, while food/beverage exporters and cosmetics offer strong visible earnings.
• KOSDAQ's recent rise is likely limited, and rate-sensitive names should be reduced.
• The US economy is in a Goldilocks state with moderate growth and stabilizing employment, but sticky inflation expectations keep rate-cut hopes delayed.