[Good Morning Market] Samsung and SK hynix Earnings Week... KOSPI Upside Potential Grows

This week, the earnings announcements of Samsung Electronics and SK hynix are expected to be the key variables determining the direction of the stock market.

Last Friday in New York, the Dow Jones Industrial Average closed at 51,947.25, up 235.60 points (0.46%) from the previous session. The S&P 500 index finished at 7,411.98, up 3.68 points (0.05%), while the tech-heavy Nasdaq Composite ended at 24,975.82, down 161.87 points (0.64%).

Although expectations for negotiations between the United States and Iran helped to calm the surge in oil prices, New York stocks closed mixed. This was due to mounting concerns over the profitability of big tech companies, coupled with weakness in semiconductor stocks like Micron and Intel.

Last week, the Korean stock market saw investor sentiment significantly weaken, as worries about a semiconductor earnings peak-out, adverse effects from leveraged trading focused on single stocks, rising international oil prices, and surging interest rates combined with both geopolitical and macroeconomic uncertainties.

However, the KOSPI's forward price-to-earnings ratio (PER) fell to 5.7 as of July 24, entering a historically undervalued zone. Technically, it also confirmed support near the 120-day moving average, suggesting that the possibility of having entered a mid-term bottom range remains valid.

This week, while the U.S. will release its June Personal Consumption Expenditures (PCE) Price Index and July inflation expectations data, the market is paying more attention to the results of the July Federal Open Market Committee (FOMC) meeting. While the consensus expects rates to remain unchanged, investors are closely watching for signs during the press conference regarding any changes in the Federal Reserve's assessment of inflation and the possibility of a rate hike in September.

In Korea, major corporate earnings announcements are scheduled this week, including Samsung Electronics, SK hynix, Samsung Electro-Mechanics, and Hanwha Aerospace. In particular, the earnings announcements and conference calls of Samsung Electronics and SK hynix are cited as the week’s core events.

At the San Francisco AI Summit held over the weekend, it was confirmed that Samsung Electronics signed a long-term supply memorandum of understanding (MOU) with Broadcom worth $200 billion over five years, while SK hynix signed letter of intent (LOI) agreements totaling $750 billion over five years with companies including Nvidia and Microsoft. This demonstrates that expanded investment in artificial intelligence (AI) is materializing into actual memory demand growth.

Securities industry analysts pointed out the key factors to watch for this week: for Samsung Electronics, the focus is on narrowing foundry losses, increasing high-bandwidth memory (HBM) sales, and the status of long-term agreements (LTA). For SK hynix, the supply outlook for DRAM and NAND flash, as well as future guidance including long-term supply agreements, are the main points of interest.

Ji Young Han, a researcher at Kiwoom Securities, analyzed, "Even though heightened volatility is inevitable as both the FOMC meeting and major global and domestic corporate earnings reports are concentrated in the middle of the week, the market currently offers more upside potential than downside risk in terms of price and valuation. It is therefore effective to either maintain existing positions in leading stocks or adopt a strategy of phased purchases during adjustments."

This content was produced with the assistance of AI translation services.