It was a rollercoaster two days for the South Korean stock market. After a sharp decline on August 19, the market rebounded significantly on August 20. Over the two days, the KOSPI index experienced a fluctuation rate of 12%, with a swing of more than 700 points. The index, which had been pressured by a shock in long-term U.S. Treasury yields, regained the 6800-point mark in just one day. Major semiconductor stocks, which had triggered the previous day's drop, surged by about 10%.
According to the Korea Exchange, the KOSPI closed at 6852.58, up 381.41 points (5.89%) from the previous trading day. This figure fully recovers the 5.80% drop that had pushed the index down to the 6400 range the day before. The index opened at 6680.34, up 3.23%, and saw a significant influx of foreign buying, prompting a buy-side circuit breaker to be activated at 9:06 AM.
The driving force behind the market's rebound was undoubtedly the major semiconductor stocks. SK Hynix's announcement of a 40 trillion won share buyback and complete cancellation plan after the market closed the previous day led to a surge of 19,100 won (12.73%), closing at 1,691,000 won. Meanwhile, expectations grew that Samsung Electronics would announce a record 100 trillion won shareholder return policy, resulting in a rise of 2,500 won (9.49%) to close at 2,710,000 won. During the day, the stock price peaked at 2,730,000 won. Samsung Electronics is expected to finalize its shareholder return plan, including special cash dividends, at a board meeting at the end of this month. The combination of large-scale share buybacks and increased dividends propelled both semiconductor giants to lead the index's rebound.
On this day, foreign investors made net purchases of 2.28 trillion won in the securities market, lifting the index. In contrast, individual investors, who had engaged in bargain hunting the previous day, sold off 2.63 trillion won to realize profits. The KOSDAQ index also rose, closing at 840.89, up 16.43 points (1.99%) from the previous trading day.
Global investment banks have raised the possibility of a reevaluation of SK Hynix's stock following its shareholder return plan. Simon Coles, a Barclays analyst, noted in a report that despite the buyback amounting to about 15% of the market capitalization, SK Hynix has sufficient capital to significantly expand production capacity and invest in new opportunities in artificial intelligence (AI) over the coming years. Barclays maintained a 'weight increase' recommendation for SK Hynix's American Depositary Receipts (ADRs) with a target price of $300, suggesting an additional upside potential of about 93%.
Nomura Securities also maintained a 'buy' rating for SK Hynix with a target price of 4.7 million won. Nomura stated, "SK Hynix's current stock price is only 3.8 times and 2.8 times the expected price-to-earnings ratios (PER) for 2026 and 2027, respectively," adding that the combination of sustained earnings growth driven by AI demand, reduced business risks through long-term contracts, and large-scale shareholder returns would help the company escape its serious undervaluation.
Market analysts expect that the strong shareholder return policies from these large-cap stocks will provide solid support for the lower end of the market's valuation. Lee Kyung-min, an analyst at Daishin Securities, stated, "The large-scale share buyback by SK Hynix and the expectations surrounding Samsung Electronics' shareholder returns have created strong upward pressure not only on semiconductors but also on the overall South Korean stock market. With the stabilization of interest rates due to the expansion of U.S. Treasury buybacks, the upward trend may continue for the time being." Lim Jeong-eun, an analyst at KB Securities, also noted that the ongoing shareholder return initiatives among major semiconductor stocks could sustain the upward trend across the market.
* This article has been translated by AI.
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