Bull Market End Signal? Securities Firm Warns: "Sell SK hynix 'At This Moment'"

Hana Securities: "Market Cap Reversal Would Signal Risk"

"Earnings-Based Rally Remains Valid... Caution Needed on Excessive Concentration"

On the 15th, when the KOSPI index surpassed the 8,000 mark intraday for the first time in history, the domestic stock market index was displayed on the electronic board in the dealing room of Hana Bank in Jung-gu, Seoul.

Amid the ongoing boom in the domestic stock market driven by the artificial intelligence (AI) semiconductor upcycle, securities analysts have issued warnings about possible 'end-of-bull-market' signals. A key variable identified is whether SK hynix will overtake Samsung Electronics in market capitalization. While the rally based on improving earnings remains solid, experts point out that if excessive capital continues to concentrate in a specific stock, it may be an indication that the market is entering an overheated phase.

Hana Securities: "Bull Market End Signal, When SK hynix Surpasses Samsung Electronics"

According to a Hana Securities report released on May 20, Jaeman Lee, a researcher at Hana Securities, stated, "The signal marking the end of the current bull market driven by corporate earnings growth will be when SK hynix surpasses Samsung Electronics in market capitalization."

This assessment focuses less on the simple change in market capitalization rankings and more on situations where market expectations outpace corporate earnings. Generally, market capitalization reflects a company's ability to generate profit, but when expectations for a particular stock become excessive, a disconnect can occur between the share price and actual performance. In other words, if SK hynix does overtake Samsung Electronics in market capitalization, it could be interpreted as a sign that excessive optimism has been priced into the broader market.

The Asia Business Daily DB

Lessons from the Dot-Com Bubble: "Collapse When Expectations Outpace Earnings"

In particular, researcher Lee cited the example of the dot-com bubble in 2000 as evidence. During that period, U.S. network equipment maker Cisco Systems surpassed Microsoft and GE to become number one in market capitalization, despite having significantly lower earnings than its competitors. Ultimately, the share price rise driven by expectations rather than earnings led to the bursting of the bubble. The securities industry views this as a "typical progression of market overheating."

However, Hana Securities believes it is difficult to say that the domestic stock market has already reached such a stage. This is because Samsung Electronics continues to lead SK hynix in terms of earnings. According to Hana Securities, Samsung Electronics is expected to maintain its lead in estimated net income for both 2026 and 2027.

Nonetheless, SK hynix's influence in the market is expanding rapidly. Currently, SK hynix accounts for approximately 22% of the KOSPI's market capitalization, reaching an all-time high, and its gap with Samsung Electronics has narrowed considerably. The report points out that should a reversal in market capitalization occur in the future, it could be seen as a signal of market overheating, and investors should manage their risks accordingly.

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