[MarketING] KOSPI Recovers Above 2500 Intraday for the First Time in 4 Months

KOSPI Rises Over 1% to Surpass 2500 Level
Semiconductors and 2nd Battery Sectors Show Strong Performance

The KOSPI rose for the second consecutive day, recovering the 2,500 level during the session. This was driven by expectations of an improvement in the semiconductor industry following Samsung Electronics' production cut decision, combined with the strength of secondary battery stocks. There are forecasts that supply and demand conditions will improve, centered on semiconductors.

KOSPI Rises for Two Consecutive Days... KOSDAQ Slightly Weak

As of 10:25 a.m. on the 10th, the KOSPI was at 2,517.26, up 26.85 points (1.08%) from the previous session. The KOSDAQ rose 2.59 points (0.29%) to 882.66. The KOSPI surpassing the 2,500 level during the session is the first time in about four months since December 1 last year (2,501.43).

Large-cap stocks are showing strength, driving the index higher. Samsung Electronics is trading at 66,000 won, up 1.54% from the previous trading day. LG Energy Solution is up 2.76%, SK Hynix 2.69%, Samsung Biologics 0.38%, LG Chem 6.02%, Samsung SDI 1.36%, Hyundai Motor 0.11%, POSCO Holdings 9.61%, and Kia 0.37%, all showing gains.

Semiconductor and secondary battery stocks are showing remarkable strength. Samsung Electronics rose more than 4% on the 7th, recovering the 65,000 won level, and is showing a rise of over 1% on this day as well. The production cut decision acted as a catalyst for the stock price increase. Samsung Electronics announced its preliminary first-quarter earnings on the 7th. Consolidated sales for the first quarter were 63 trillion won, down 19% year-on-year, and operating profit fell 95.75% to 600 billion won. This is the first time in 14 years that Samsung Electronics' quarterly operating profit has fallen below 1 trillion won. Since the poor performance was already anticipated, market attention focused on whether production cuts would be implemented. Along with the earnings announcement, Samsung Electronics stated, "In addition to the ongoing optimization of line operations for the future and the expansion of engineering runs (trial production), we are further adjusting memory production volumes downward to a meaningful level, focusing on products with secured supply," officially confirming artificial production cuts. Minbok Wi, a researcher at Daishin Securities, said, "Samsung Electronics announced a downward adjustment of memory production volumes to a meaningful level beyond the natural production cuts already underway, which is a clear change from the previous stance that there were no artificial cuts and serves as the trigger for the stock price rise that the market has been waiting for," adding, "Although the specific scale of the production cut was not disclosed, a 15-20% reduction in wafer input compared to the end of 2022 is expected."

Secondary battery stocks are strong due to improved earnings following the Inflation Reduction Act (IRA). LG Energy Solution is rising on strong first-quarter results. On the 7th, LG Energy Solution announced preliminary first-quarter earnings showing sales increased 101% year-on-year to 8.7 trillion won, and operating profit rose 145% to 633.2 billion won. Yongjin Jung, a researcher at Shinhan Investment Corp., said, "By reflecting the U.S. Advanced Manufacturing Production Credit (AMPC) benefit from the first quarter of this year, LG Energy Solution reported earnings that exceeded market expectations by 35%. The AMPC benefit reflected this time amounted to 100.3 billion won, which, assuming $35 per kWh, corresponds to support for approximately 2 GWh of shipments. Even excluding AMPC, operating profit increased 106% year-on-year to 532.9 billion won, exceeding market consensus by 14%," he analyzed.

POSCO Holdings is showing a strong gain of over 7% as the value of its lithium business is highlighted. Hyunwook Park, a researcher at Hyundai Motor Securities, said, "In addition to expectations for an improvement in the steel industry, lithium value is being reflected in the stock price," adding, "The 43,000-ton Gwangyang lithium plant is scheduled to be completed in October this year, and the first phase of POSCO Argentina is also expected to be added in April 2024."

Expectations for Supply and Demand Improvement Centered on Semiconductors

Expectations for an improvement in the semiconductor industry are expanding due to Samsung Electronics' production cuts, and supply and demand conditions are expected to improve, centered on semiconductors.

Jiyoung Han, a researcher at Kiwoom Securities, said, "We need to check Samsung Electronics' conference call at the end of March and SK Hynix's earnings, but as can be inferred from the large-scale net buying by foreigners and institutions on the 7th, the market seems to be supporting the view that the semiconductor industry is passing through its worst phase," adding, "This week, it will be necessary to observe whether supply and demand conditions improve not only in the semiconductor sector, including large set manufacturers and materials, parts, and equipment (MPE), but also in the overall domestic stock market, mainly led by foreigners and institutions."

Foreign investors are expected to increase their semiconductor holdings, which they had previously reduced. Jaeman Lee, a researcher at Hana Securities, said, "In the past, during the U.S. interest rate hike phase, foreigners net sold domestic semiconductors centered on Samsung Electronics, but in the subsequent pause phase, they switched to net buying centered on Samsung Electronics," adding, "There is a possibility that foreigners will expand their holdings of domestic semiconductors, which they had excessively reduced, centered on Samsung Electronics." Foreign ownership of Samsung Electronics has fallen from a peak of 58% to around 51% currently.

Attention is focused on whether the strength of semiconductors can offset concerns about a U.S. economic recession. Yujun Choi, a researcher at Shinhan Investment Corp., said, "On the 7th, institutional and foreign demand was mostly concentrated in semiconductors, making semiconductors a decisive factor for the index direction," adding, "As concerns about a U.S. economic downturn emerge, whether expectations for semiconductor recovery can offset this is a key point to watch, and there is growing weight on the possibility of relative outperformance of the domestic stock market, which has a high semiconductor weighting."

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