◆Aju Economy Major News
▷AI Profitability and Supply Concerns Hit Market... KOSPI Falls 3.52%
- On October 22, the KOSPI closed at 5,533.77, down 3.52% from the previous trading day, according to the Korea Exchange. Although it attempted to rebound early in the session, it failed to maintain upward momentum, remaining below the 5,600 mark.
- Large-cap semiconductor stocks led the decline, with Samsung Electronics and SK Hynix falling 4.03% and 5.49%, respectively. This drop was attributed to profit-taking following the previous day's gains, as well as concerns over SK Hynix's plans for a dual listing of its U.S. subsidiary, Solidigm.
- Supply pressures also contributed to the index's decline. Foreign and institutional investors sold a net 399.1 billion won and 683.5 billion won, respectively, while individual investors bought a net 1.0364 trillion won, but this was not enough to prevent the index from falling.
- The conclusion of share buybacks by Samsung Electronics and SK Hynix also weakened buying support. Samsung completed a 15 trillion won share buyback on October 6, while SK Hynix finished a 40 trillion won buyback on October 21.
- Earnings reports from major U.S. tech companies have not fully alleviated market anxieties. Meta reported strong third-quarter results but did not provide specific guidance for capital expenditures next year. Questions remain about whether companies can sustain cash flow and profitability amid ongoing AI growth.
◆Major Reports
▷Rising Rates Cause Worry, Falling Rates Also Cause Concern? [Shinhan Investment Corp]
- Whether rates rise or fall, stock prices decline. Investors may feel that the logic explaining the market has shifted. It is not the rates themselves that move the market, but rather the causes and pace of changes that alter their significance.
- When driven by investment demand, rising rates may not be a factor for market decline but rather a selective factor distinguishing corporate performance. Companies that can generate returns exceeding the rising cost of capital (WACC) and expand future cash flows may find growth opportunities, while those with uncertain recovery capabilities may face multiple burdens. Conversely, rising rates due to supply shocks can harm corporate margins alongside inflation.
- The same applies to falling rates. Gradual declines due to easing inflation and soft landings are positive, but sharp declines reflecting growth slowdowns and increased credit risks may not bode well for risk assets. If doubts about recovery translate into credit concerns, the preference for safe assets may lead to falling treasury yields while credit spreads for riskier companies widen.
◆Major Announcements After Market Close (October 22)
▷Kyobo Securities announces 200 billion won capital increase... allocated to Trinique KS First Co., Ltd.
▷Lotte Holdings states, "Aiming for a shareholder return rate of over 35% to continue until 2029"
▷LG Display reports third-quarter operating profit of 250.6 billion won... down 42% year-on-year
▷IPARK Hyundai Industrial Development reports third-quarter operating profit of 165.8 billion won... up 127% year-on-year
◆Fund Trends (as of October 21, excluding ETFs)
▷Domestic Equity: 28.902 trillion won
▷Overseas Equity: 21.8 billion won
◆Key Schedule for Today (October 23)
▷Japan: Consumer Price Index (September)
▷Germany: Manufacturing and Services PMI (October)
▷Eurozone: Manufacturing and Services PMI (October)
▷UK: Retail Sales (September), Manufacturing and Services PMI (October)
▷US: Manufacturing and Services PMI (October), Consumer Sentiment Index (October final)
* This article has been translated by AI.
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