Nvidia Earnings Boost Semiconductor Sentiment, Nomura's “10,000 KOSPI” speculation and Samsung Strike Overhang skyrockets 606 points in KOSPI
The closing price of KOSPI and the stock prices of Samsung Electronics and SK Hynix are displayed on an electronic board at the Kookmin Bank dealing room in Jung-gu, Seoul, on the afternoon of May 21.
The KOSPI reclaimed the 7,800 mark on May 21, rewriting its record for the largest increase in history. It is the first time the KOSPI closing price has exceeded 7,800 since May 14 (7,981.41). This surge came as positive factors continued, including the resolution of the Samsung Electronics strike risk and the strong performance of the global artificial intelligence bellwether Nvidia.
On this day, the KOSPI index closed at 7,815.59, skyrocketing by 606.64 points (8.42%) from the previous trading day. The 606.64 points recorded on this day is the largest increase in history based on closing prices. In just two months, it surpassed the previous maximum increase (490.36 points) recorded on March 5 by more than 100 points.
The index started with a 3.8% level increase from the previous session and staged a dramatic surge from early trading. During this process, a suspension of program trading quotes (buy sidecar) was activated in both the KOSPI and KOSDAQ markets. It has been a month and a half since buy sidecars were simultaneously triggered in both markets on April 8.
The explosive market on this day was largely driven by the simultaneous resolution or mitigation of major negative factors that had been dragging down the domestic stock market. First, labor and management at Samsung Electronics reached a dramatic agreement on wage negotiations the previous night, shaking off concerns of a prolonged strike. The fact that Nvidia, the barometer of global tech stocks, achieved a new revenue record for 12 consecutive quarters and announced adjusted earnings per share (EPS) exceeding market expectations also breathed warmth into semiconductors and the broader tech sector.
In addition, the calming of the surge in US Treasury yields and international oil prices, along with the easing of Middle East tensions after US President Donald Trump stated, “Negotiations with Iran are in the final stages,” improved investor sentiment.
By investor type, institutional investors net bought approximately 3 trillion won (approximately $2 billion) in the KOSPI market. Foreign investors continued their net selling for 11 consecutive trading days, but the selling pressure significantly eased, while retail investors turned to net selling after 11 trading days to take profits.
Institutions net bought 2.8846 trillion won, leading the index’s rise. On the other hand, retail investors and foreigners net sold 2.6386 trillion won and 243.4 billion won, respectively. This is interpreted as retail investors, who were net buyers in early trading, moving to lock in profits during the skyrocketing phase.
Top market capitalization stocks also shot up like columns of flame. Samsung Electronics, having cleared strike concerns, jumped 8.51% to close at 299,500 won, reaching its all-time high again. It even touched the “300,000 Samsung” mark during intraday trading. SK Hynix also skyrocketed by 11.17%, recovering to 1,940,000 won and placing the “2,000,000 Hynix” milestone right before its eyes.
In addition, SK Square (+14.58%), Samsung Life Insurance (+13.78%), Samsung Electro-Mechanics (+13.48%), Hyundai Motor (+12.50%), and Doosan Enerbility (+7.01%) rose significantly during the regular session on this day. As Samsung Electronics’ stock price rose, the share prices of affiliates holding stakes in Samsung Electronics, such as Samsung Life Insurance and Samsung C&T (+12.96%), also climbed together, while Samsung Electro-Mechanics benefited from signing a supply contract for silicon capacitors (power stabilization components for semiconductors) with a major global company. In the KOSDAQ, EO Technics (+18.83%), Rainbow Robotics (+16.46%), EcoPro BM (+10.36%), and EcoPro (+9.35%) advanced.
The KOSDAQ index also closed at 1,105.97, up by 49.90 points (4.73%). In the KOSDAQ market, foreigners and institutions net bought 136.4 billion won and 138.4 billion won, respectively, while retail investors net sold 258 billion won.
The Korea Exchange activated a buy sidecar in the KOSPI market at 9:24:02 a.m. on this day, followed by the KOSDAQ market at 9:27:01 a.m. The sidecar is triggered in the KOSPI when KOSPI 200 futures rise by 5% or more, and in the KOSDAQ when KOSDAQ 150 futures (6% or more) and KOSDAQ 150 spot prices (3% or more) simultaneously rise, with each condition lasting for more than 1 minute. When activated, the effect of program buy quotes is suspended for 5 minutes. This is the 9th time a buy sidecar has been activated in the KOSPI this year, and the 7th for the KOSDAQ. The KOSPI buy sidecar was triggered for the first time since May 11, and the most recent case for the KOSDAQ was on April 8.
However, internal and external uncertainties have not completely faded, as a union member vote on the Samsung Electronics labor-management agreement is scheduled, and it remains to be seen whether the end-of-war agreement between the US and Iran will be realized. The trend of US interest rates following the release of economic indicators, such as US jobless claims, on this night (Korea Standard Time) is also a variable.
The Korea Shareholders Movement Headquarters, a minority shareholder group of Samsung Electronics, stated that if the tentative labor-management agreement is confirmed through the union vote, they will take legal action, including a provisional injunction to suspend its effect and a claim for damages. The possibility is being raised that legal disputes and social growing pains surrounding the implementation of the agreement will continue.
US President Donald Trump stating on May 20 (local time) that negotiations to end the war with Iran had entered the final stage also improved investor sentiment across the global financial market. Semiconductor investment sentiment also grew overnight as US Nvidia released earnings that exceeded market expectations.
Lim Jeong-eun, a researcher at KB Securities, said, “It is necessary to pay attention to the sustainability of the improvement in semiconductor investor sentiment driven by Nvidia’s strong earnings and robust exports,” adding, “Depending on whether the inflow of foreign supply and demand continues in the future, an additional index level-up can also be expected.”
Japanese brokerage firm Nomura, in a report published on the Korean stock market the previous day, upwardly revised its KOSPI target for this year from the previous 7,500 to 8,000 to 10,000 to 11,000, stating that semiconductor stocks will lead the KOSPI’s rise over the next few years. Although the possibility of a 10,000 KOSPI had been discussed in the domestic securities industry, with KB Securities proposing a 10,500 KOSPI and Hyundai Motor Securities a 12,000 scenario in a bull market, it is the first time a foreign brokerage has presented a forecast exceeding 10,000.
However, there are still areas for caution before concluding that this rebound is merely a relief rally. The securities industry believes it remains to be seen whether President Trump’s remarks, which are the core basis for the end-of-war expectations, will actually be implemented. This is because there is a precedent of President Trump reversing his remarks, such as previously mentioning the resumption of war against Iran and then mentioning an end to the war again. Park Sang-hyun, a researcher at iM Securities, said, “Not only the Iran issue but also the Trump-style narrative (epic) economic trend will be further strengthened ahead of the midterm elections.”
Meanwhile, in the Seoul Foreign Exchange Market, the won-dollar exchange rate closed daytime trading at 1,506.1 won, down by 0.7 won from the previous trading day.
Yoon Young-sil
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