Samsung Electronics and SK hynix Approaching 40% of KOSPI Market Cap, Concentrating on ‘Two Top’ Stocks Intensifies Amid Volatile Market
Samsung Electronics and SK hynix. (Photo courtesy of techovedas.com)
Samsung Electronics and SK hynix, Korea’s ‘flagship stocks,’ are approaching 40% of KOSPI’s total market capitalization. The main factors cited include the outlook that the semiconductor industry’s ‘super cycle’ will continue due to rising AI (artificial intelligence) demand, along with safety-seeking sentiment to ride the leading stocks as market volatility has increased due to the Iran war.
According to Korea Exchange on March 16, the combined share of Samsung Electronics and SK hynix in KOSPI stood at 38.3% as of March 13. It was only 23.7% as of March last year, but within about a year, it is now approaching the 40% threshold. During the same period, the share of the top 10 stocks by market capitalization also increased from 41.1% to 51.7%. This indicates that capital concentration on large-cap stocks has intensified amid KOSPI’s high-altitude march, including breaking through 6,000 for the first time in history recently.
The surge in buying by individual investors this month also played a role. This is the result of individual investors engaging in ‘bottom-fishing’ as a ‘roller-coaster market’ unfolded, including Samsung Electronics’ stock plunging more than 11% in a single day following the Iran war.
According to Korea Exchange, from March 3 to March 13, individual investors net purchased (where purchases exceed sales) Samsung Electronics and SK hynix for 7.946.6 trillion won (approximately $5.442 billion) and 3.350.1 trillion won respectively. This means 64.1% of the total net purchases by individuals (17,613.3 billion won) during the same period was concentrated on these two stocks.
While individual buying continues, there are signs that capital inflows will accelerate as exchange-traded funds (ETFs) focusing on Samsung Electronics and SK hynix are successively appearing in the ETF market.
According to the financial investment industry, Shinhan Asset Management will newly list ‘SOL AI Semiconductor TOP2 Plus’ on March 17, in which Samsung Electronics and SK hynix investment ratio accounts for half. The other half of the portfolio also consists of AI semiconductor companies. ‘RISE Samsung Electronics SK hynix Bond Mixed 50’ from KB Asset Management, which was launched last month, also has half of its investment weighting in the two stocks. Although ‘HANARO Fn K-Semiconductor (approximately 50%)’ and ‘KODEX Semiconductor (approximately 47%),’ in which the investment ratio of Samsung Electronics and SK hynix is about half, already exist in the ETF market, the successive launches of similar products indicate strong investment demand.
Regarding the market structure centered on the semiconductor ‘two top,’ voices in the securities industry are calling for both optimism based on semiconductor industry conditions and caution against excessive stock concentration.
Indeed, major securities firms including Korea Investment & Securities, Kiwoom Securities, DB Securities, KB Securities, and Hana Securities have raised their target prices for Samsung Electronics this month. KB Securities has the highest target price (320,000 won), while DB Securities has the lowest (230,000 won). For SK hynix, Korea Investment & Securities, Kiwoom Securities, Daol Investment & Securities, and KB Securities have raised their target prices, with Kiwoom Securities presenting the highest forecast at 1.7 million won. Lee Jae-man, a researcher at Hana Securities, said, “If the earnings announcements of tech companies centered on semiconductors next month meet expectations, there is a high possibility that the index will return to an upward trend based on the maintenance of global economic cycle expansion.”
Concerns about over-reliance on the semiconductor ‘two top’ are also emerging. Jeong Yong-taek, a researcher at IBK Investment & Securities, said, “The reality of our country where two semiconductor stocks account for nearly 40% of the entire market, compared to the fact that the two largest stocks in the U.S. S&P 500 account for just over 10%, is a key factor explaining the volatility difference between the two indices,” adding, “When facing an economic inflection point and declining, the economic downturn could be steeper compared to periods of balanced growth.”
Kim Eun-jin
pr@businesskorea.co.kr
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