[MarketING] 'Kioxia Acquisition' Boost... KOSPI Brightens Amid Semiconductor Strength

KOSPI Gains for Two Consecutive Days
KOSDAQ Starts Up, Then Moves Sideways

The KOSPI has continued its strong performance for the second consecutive day. Semiconductor stocks are leading the index's rise, showing significant gains in the early trading session, supported by news related to mergers and acquisitions (M&A) and positive market outlooks.

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

As of 10:20 a.m. on the 16th, the KOSPI was up 7.28 points (0.29%) from the previous session, standing at 2486.63. The KOSDAQ rose 0.43 points (0.05%) to 814.96. Although the KOSDAQ initially started higher, it turned lower before rebounding and is currently moving within a narrow range.

Semiconductor stocks have shown a rare strong upward trend, driving the index higher. Early in the session, Samsung Electronics rose 1.40%, and SK Hynix increased by 4.05% compared to the previous day.

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The U.S. stock market also closed higher the previous day, buoyed by strength in semiconductor stocks. On the 15th (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average rose 0.14%, the S&P 500 increased 0.30%, and the Nasdaq Composite gained 0.66% compared to the previous day.

Sangyoung Seo, a researcher at Mirae Asset Securities, explained, "The U.S. market initially fell due to uncertainties surrounding the debt ceiling negotiations, weak economic indicators, and hawkish remarks from Federal Reserve (Fed) officials. However, positive news about the semiconductor sector led the Philadelphia Semiconductor Index to rise 2.68%, turning the market bullish."

Positive outlooks on the semiconductor market and M&A news acted as favorable factors. Citigroup gave a positive evaluation of Lam Research, citing that if growth resumes, total margins could improve from the current 44% to 48%. Consequently, Lam Research rose 4.78%. Additionally, market research firm Vantage Market Research forecasted an average annual growth rate of 8.8% in the semiconductor market through 2030, which helped Micron rise 6.11%. Western Digital surged 11.26% on news that merger talks with Japanese memory company Kioxia are accelerating.

Ji-young Han, a researcher at Kiwoom Securities, said, "Since mid-April, the stock prices of major domestic semiconductor companies like Samsung Electronics have been trapped in a trading range, and growing concerns about delayed industry recovery have weighed on these stocks. However, the sharp rise in U.S. stocks due to Western Digital's merger news with Kioxia and Micron's semiconductor sector improvement expectations driven by strong artificial intelligence (AI) demand, along with the strong performance of the Philadelphia Semiconductor Index, are factors that will improve investor sentiment for domestic semiconductor stocks."

Western Digital's Merger Talks with Kioxia Positive for Domestic Semiconductor Stocks

Analysis suggests that Western Digital's merger with Kioxia is positive news for domestic semiconductor stocks.

Researcher Seo stated, "It is important to note that Western Digital's acquisition of Kioxia is progressing rapidly. Although there are many hurdles to overcome, such as the possibility of China rejecting merger approval, if Western Digital acquires Kioxia, it will reduce the number of participants in the NAND market, which could positively influence investor sentiment." He added, "Since Bain Capital consortium, which includes SK Hynix, holds 49.9% of Kioxia's shares, if the acquisition is completed, SK Hynix will have opportunities to recover funds through partial sales of Western Digital shares, which is also positive for individual stock investor sentiment."

If the acquisition is successful, it is expected to positively impact NAND supply and demand. Dongwon Kim, a researcher at KB Securities, explained, "Historically, mergers among memory semiconductor companies have positively affected stock prices and long-term performance. The formalization of merger talks between Kioxia and Western Digital is expected to positively influence NAND purchasing sentiment and supply-demand dynamics, regardless of the synergy between the two companies or the final merger outcome, acting as a catalyst for NAND supply-demand improvement."

Sunwoo Kim, a researcher at Meritz Securities, said, "Reducing production by leading companies alone is insufficient to reverse the industry downturn. Therefore, mergers and acquisitions among memory companies, as in the past, will contribute to forming a cycle bottom."

There are forecasts that the semiconductor industry will improve in the second half of the year. Researcher Dongwon Kim said, "From the second half, the semiconductor sector is expected to outperform the market due to supply-demand improvements, easing price declines, and inventory reductions, making the second half the time for semiconductors. Considering that Samsung Electronics' stock price began a significant upward trend after the quarter when memory semiconductor inventory peaked in 2007, the second quarter, which is the inventory peak period, is judged to be an appropriate time to increase weighting."

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