[MarketING] Samsung Electronics Returns to '60,000 Won Electronics' Amid Foreign and Institutional Selling

KOSPI Falls Over 1% to 2520 Level
Samsung Electronics Drops Over 2% Amid Institutional and Foreign Selling

The KOSPI fell for the fourth consecutive day, retreating to the 2520 level. On the day Samsung Electronics announced its preliminary Q2 earnings, foreign and institutional investors sold off shares, leading Samsung Electronics to drop more than 2%, which dragged the index down. Samsung Electronics fell below the 70,000 KRW mark for the first time in about 40 days, returning to the '60,000 KRW' range.

KOSPI retreats to 2520 level... Samsung Electronics down over 2%

On the 7th, the KOSPI closed at 2526.71, down 29.58 points (1.16%) from the previous day. The KOSDAQ ended the session at 867.27, down 3.26 points (0.37%).

[Image source=Yonhap News]

Samsung Electronics, which announced its preliminary Q2 earnings on the day, led the KOSPI decline with a drop of over 2%. Samsung Electronics closed at 69,900 KRW, down 2.37% from the previous day. This is the first time Samsung Electronics has closed in the 60,000 KRW range since May 25.

Institutional and foreign selling pressured both the KOSPI and Samsung Electronics. On the day, institutions net sold 761.8 billion KRW in the KOSPI market and 120.3 billion KRW in the KOSDAQ market. Foreign investors sold 45 billion KRW and 31.1 billion KRW in the two markets respectively, and also net sold 1.4597 trillion KRW in the futures market. Individual investors net bought 762.5 billion KRW and 144 billion KRW respectively.

On the day, institutions and foreign investors sold the most Samsung Electronics shares. In particular, foreign investors, who had been net buyers of Samsung Electronics, appeared to have been waiting to sell immediately after the earnings announcement. Foreign investors sold 85.9 billion KRW and institutions sold 221.4 billion KRW worth of shares.

Kim Seok-hwan, a researcher at Mirae Asset Securities, analyzed, "The strong U.S. employment data and service sector index releases caused concerns over the Federal Reserve's hawkish (monetary tightening preference) stance," adding, "Following Samsung Electronics' earnings announcement, foreign selling emerged, expanding the decline."

On the day, Samsung Electronics announced that its consolidated Q2 sales were 60 trillion KRW, down 22.28% year-on-year. Compared to the previous quarter, sales decreased by 5.88%. Operating profit was provisionally estimated at 600 billion KRW. Although this exceeded the market consensus by 281.8 billion KRW, it was down 95.74% from the 14.1 trillion KRW operating profit in Q2 last year. It also decreased 6.25% from the previous quarter. The operating profit was the lowest since Q1 2009 (590 billion KRW) during the global financial crisis.

Researcher Kim said, "Although Samsung Electronics announced its lowest quarterly earnings in 14 years, expectations for production cuts and industry improvement in the second half remain," adding, "However, due to the weakness in the Philadelphia Semiconductor Index and increased foreign selling, which had been net buyers in the electrical and electronics sector, the stock showed a decline of over 2%."

Although Samsung Electronics' earnings exceeded the Q2 consensus, the results were considered disappointing given the heightened expectations. Kim Sun-woo, a researcher at Meritz Securities, said, "Considering the recent steady stock price rise, favorable exchange rates, and improving semiconductor export trends, the market's expectations were set higher, but the results were somewhat disappointing."

Samsung Electronics' Q3 earnings are expected to improve. Researcher Kim Sun-woo explained, "Q3 earnings are expected to slightly increase based on seasonality," adding, "However, the semiconductor sector, which accounts for the largest portion, is crucial for setting the tone at Samsung Electronics' earnings briefing. It is essential to confirm whether there will be an expansion in production cuts and a declaration of reduced capital expenditures."

Q2 Earnings Season Begins

Starting with Samsung Electronics on the day, the domestic stock market entered the Q2 earnings season. Following Samsung Electronics, LG Electronics and LG Energy Solution also released their earnings on the same day.

LG Electronics announced that its consolidated Q2 operating profit was provisionally estimated at 892.7 billion KRW, up 12.7% year-on-year. Sales reached 19.9988 trillion KRW, a 2.7% increase. The Q2 sales were the highest ever recorded. However, while Q2 sales exceeded market expectations, operating profit fell short. According to financial information provider FnGuide, LG Electronics' Q2 earnings consensus was sales of 19.7204 trillion KRW and operating profit of 977.9 billion KRW.

For the first half of the year, sales were 40.4147 trillion KRW and operating profit was 2.3901 trillion KRW. Sales exceeded 40 trillion KRW for the second consecutive year, and operating profit surpassed 2 trillion KRW for the third consecutive year. These were the second-highest sales and third-highest operating profit in history for the first half.

LG Energy Solution announced that its consolidated Q2 operating profit was provisionally estimated at 611.6 billion KRW, a 212.7% increase year-on-year. During the same period, sales were 8.7735 trillion KRW, up 73% year-on-year.

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