NPS Chairman Kim Sung-joo: "This Year's Return Beats Last Year's"—Semiconductor, Construction, Nuclear Power Stocks Rally Ahead of Nvidia Earnings

The KOSPI extended its gains to rally more than 1.5%, moving past the 6,844 level, while the KOSDAQ fell about 0.7% to trade near 821 points. Foreign investors were reducing the scale of their selling on the main exchange, having sold as much as 700 billion won at one point intraday before narrowing that to around 350 billion won. On the KOSDAQ, however, foreign selling actually increased to around 120 billion won.

The won, which had fallen below 1,400 per dollar amid continued dollar weakness, rebounded slightly on the day to trade around 1,387. With market attention concentrated ahead of Nvidia's earnings release scheduled for 6 a.m. the next morning, news also emerged that at the Hachi 2026 event in Las Vegas, OpenAI unveiled its first AI inference chip, Halapeno, which is presumed to incorporate Samsung HBM4.

Construction stocks and nuclear power/gas turbine-related stocks showed strength in the market that day. Daewoo E&C, Hyundai E&C, and GS E&C rose 6-7%, Samsung C&T rose about 5.8%, and Doosan Enerbility, having jumped more than 10% the previous day, added a further roughly 5.9% rebound.

Of the roughly 100 trillion won in shareholder return funds Samsung Electronics plans to raise going forward, 30 trillion won has already been allocated to cash dividends, and it has been suggested that an additional 40 trillion won of the remaining 70 trillion won could again be allocated to cash dividends. That would leave about 30 trillion won for share buybacks, but concerns were raised that this could once again run afoul of the Financial Industry Separation Act.

As an alternative, a proposal was discussed under which Samsung Electronics would, when buying back its own shares, purchase not only shares on the open market but also the Samsung Electronics stakes held by Samsung Life Insurance and Samsung Fire & Marine Insurance at the same ratio, then retire them together. This would keep the stakes of Chairman Lee Jae-yong and group affiliates unchanged while reducing the number of shares outstanding, and would actually raise Samsung C&T's stake ratio, according to the explanation.

Questions were also raised as to whether this method would constitute breach of trust, but the discussion concluded that it would not. In the end, it was presented as a practical solution allowing Samsung Electronics to simultaneously retire treasury shares and resolve affiliate cross-shareholdings without directly running into the legal constraints of the Financial Industry Separation Act.

This discussion naturally led into the issue of SK Hynix's treasury share retirement. Reports that SK Hynix union members are reluctant to receive stock as performance bonuses raised concerns that this could be misread by the market as a signal that even company insiders lack confidence in the stock's upside.

Nvidia rebounded about 2% overnight to close at $213 after seven consecutive trading days of declines, pushing its market capitalization above $5.1 trillion. Ahead of the earnings release, the market is focused on three points: whether gross margin can be maintained in the mid-70s percentage range, what Jensen Huang says regarding the circular financing controversy, and the share and sustainability of H00 exports to China within overall revenue.

Analysis suggested that any margin decline is likely attributable not to weakening market dominance but to bottlenecks arising during the transition to the new Vera Rubin product, rather than a loss of pricing power. In fact, Nvidia has posted four consecutive quarters of earnings beats, yet its stock has performed poorly on the day of the announcement each time—suggesting that for this earnings report as well, commentary on the future AI ecosystem and Vera Rubin should draw more attention than the numbers themselves.

At the Hachi 2026 event, Vera Rubin's first real-world performance benchmarks were unveiled, showing throughput gains of up to 30 times on DeepSeek workloads; Vera chips are also set to be deployed at SpaceX, and edge computers for robotics, drones, and vision AI were unveiled alongside it. As Vera Rubin adoption spreads, demand for HBM4 is expected to rise, which could translate into large-scale semiconductor supply orders for SK Hynix and Samsung Electronics—underscoring the significance for Korea's semiconductor industry.

OpenAI unveiled early sample performance results for its in-house AI inference chip, Halapeno. On a per-megawatt output token throughput basis, it outperformed Nvidia's Vera Rubin, but on a total cost-to-performance basis, Vera Rubin still came out ahead. Results also showed it operating smoothly when running the Kimi K3 model, and reports suggested the chip is presumed to incorporate Samsung semiconductors.

The trend of OpenAI joining Google, Meta, and Amazon in developing in-house AI chips was interpreted as a signal that the overall AI chip market is expanding. Efforts by various companies to reduce their reliance on Nvidia are, in effect, growing the pie for the entire ecosystem.

Against this backdrop, AI hardware-related stocks rose on the New York stock market that day. The Philadelphia Semiconductor Index gained about 1.4%, and individual stocks such as Marvell Technology rose more than 4%. Ultimately, given that Korean-made semiconductors go into chips regardless of which company makes them, this was received as a positive signal for the domestic industry.

Behind the broad-based rally in construction stocks lies strong order growth in non-residential rather than residential segments. According to a Hanwha Investment & Securities report, orders in non-residential construction areas such as semiconductors, data centers, nuclear power, and LPG are surging, and domestic construction order statistics also showed a marked increase in the factory/warehouse segment. This year's order targets were found to already be 60-70% filled.

News that Samsung E&A won the contract to restore a Kuwaiti oil refining facility was also flagged as noteworthy, as it could signal that Middle Eastern countries are accelerating reconstruction projects in anticipation of the war situation calming down. The Ministry of Land, Infrastructure and Transport's plan to invite 40 major construction firms tomorrow to a briefing on US government-ordered construction projects was also read as Team Korea-level support for overseas order wins.

However, it was pointed out that when Samsung Engineering first won a Dow Chemical order in the past, its stock surged, but the company actually incurred losses exceeding 300 billion won—suggesting that cost management and profitability matter more than winning the order itself. The structural problem of domestic construction firms competing against each other in overseas bidding and eroding their own margins was also raised.

The analysis suggests the construction sector, long neglected due to sluggish domestic housing conditions and concerns over PF (project financing) defaults, is being re-rated as new order sources such as data centers, nuclear power, and Middle East reconstruction are uncovered. A positive view was presented that this is not a one-off rebound but a structural expansion of orders likely to continue over the next two to three years.

Doosan Enerbility rose a further roughly 5.9% on the day, following a jump of more than 10% the previous day. NH Investment & Securities set a target price of 133,000 won, calling it momentum that will continue through November. The analysis noted that the company has entered a phase of strengthening domestic and overseas nuclear power industry momentum running up to the US midterm elections, and that, backed by its unrivaled position in the large-reactor and SMR markets, a full-fledged expansion of orders is expected starting next year.

Beyond nuclear power, news emerged that the gas turbine segment had already filled 97% of its annual target in the first half of the year. Amid a sequence in which semiconductor, power, cable, and power generation sectors have each drawn attention in turn, the fact that gas turbines—an area that had drawn relatively less attention—are also seeing strong orders was interpreted as a sign that the power-related investment thesis remains alive.

It was emphasized that stock prices do not move industries—industries move stock prices—and it was reassessed that AI/data center-driven power investment is continuing regardless of the market's temporary concerns.

Reports emerged that Pakistan is acting as a mediator between the United States and Iran. According to the reports, Pakistan's army chief, at President Trump's request, visited Iran to discuss preventing an escalation, reopening the Strait of Hormuz, and reaching a swift ceasefire through negotiation. Pakistan's interior minister said the two sides held very constructive talks, and Iran's Tasnim News Agency reported that Iran's position on the Strait of Hormuz had been clearly conveyed to the Pakistani side.

Market attention grew further after Russia's RIA Novosti reported that the United States and Iran had agreed to a ceasefire, which could be announced within a few days. Reports that the CIA director had recently visited Russia also emerged, suggesting behind-the-scenes coordination was under way. However, given past instances of ceasefire-related reports that failed to materialize, market confidence remains limited.

On this news, international oil prices fell a further roughly 2% in Asian trading, with WTI dropping to $80. Having fallen from the $90 range to $80, a further decline could bring it into the $70 range. However, it was pointed out that while the domestic stock market tends to react to such overseas news in real time, it tends to be more hesitant and less confident in digesting good news.

NPS Chairman Kim Sung-joo appeared on Noon Salon. Asked to reflect on his eight months in office, he said the early period was marked heavily by currency issues stemming from won weakness, followed by what he called a 'roller-KOSPI' market of repeated sharp swings. As of the end of May, the National Pension Service's return stood at 26.18%, which he said far exceeds major global pension funds such as US CalPERS (about 15%) and Norway's pension fund (about 15%), placing it at the top globally.

He said last year's annual return of 18.82% was an all-time high, overwhelmingly the best among the world's top five pension funds, with fund assets surpassing 1,848 trillion won. He disclosed for the first time that results for the period through end-June, to be announced in two days, are even better, and that results through end-August also exceed last year's full-year performance. However, he stressed that given the nature of a pension fund, which must be evaluated over long-term horizons of 3-5 years and 10-20 years, short-term results should not be a source of excessive joy or worry.

He explained that the NPS's investment share of the KOSPI market is only about 6-7% of the total, and that turnover is low, with trading conducted on a two-to-three-year cycle. He also related an episode from June-July when reports emerged that the NPS would unload up to 74 trillion won in a rebalancing-driven selling wave, prompting him to post a rebuttal in the early morning hours—explaining that in reality, the process follows precise rules designed to minimize market impact.

Chairman Kim Sung-joo said that when he first took office in 2017, the domestic-to-overseas investment ratio was 7:3, and he shifted this through three directions: expanding overseas investment, alternative investment, and direct investment. Over five years, by raising the overseas share by 2 percentage points annually, he reversed the ratio to 6:4, which he said roughly doubled the average return from the previous 4-6% to 8-9%. He said cumulative returns from overseas investment from 2017 through 2025 totaled about 512 trillion won, exceeding 50% of total returns.

He said the policy of expanding overseas investment will continue going forward, though it cannot continue indefinitely, and that he views the minimum domestic investment share at around 30-35%. Asked whether Korea's National Pension Service's 28.8% domestic equity share is excessive compared with Japan's Government Pension Investment Fund (GPIF), which maintains a 5:5 domestic-overseas split with a 25% domestic equity share, he said further debate is needed.

He also expressed frustration that even though the NPS does not trade frequently, it becomes a target of political interpretation every time the market fluctuates. Recalling the 2017 Samsung C&T merger affair, during which the chairman and the head of the Fund Management Headquarters were arrested and the organization effectively collapsed, he said he declared the independence of fund management the top priority immediately upon taking office, and has since established independence unshaken by any political or economic power.

Regarding the government's policy direction of channeling pension fund money to revitalize the KOSDAQ market, he stated the principle that it is unacceptable for the NPS to be deployed for the policy purpose of market stabilization, and that investment would naturally increase once institutional improvements to the KOSDAQ market bring risk to a level investors can bear.

Chairman Kim Sung-joo said the responsible investment principles and stewardship code introduced in 2018 were upgraded to 'version 2.0' earlier this year. As a result, he said, the NPS's rate of dissenting votes rose sharply during this year's March shareholder meeting season, and requiring disclosure of the reasoning behind every vote, whether for or against, boosted market trust. In particular, he said the NPS consistently voted against agenda items aimed at nullifying commercial code amendments, and that some companies withdrew such agenda items on their own out of concern for the NPS's opposition.

On the fund depletion timeline, he said the previously projected depletion year of 2056—before the 2025 pension reform—was pushed back seven years by the reform, and that factoring in recent strong investment performance, it is now estimated to be pushed back to 2078. However, he cautioned that this is only an estimate, and that with the number of pension recipients expected to rise from the current 7.6 million to more than 10 million and annual payouts expected to reach 300-400 trillion won, optimism would be premature.

On future policy direction, he said he wants to position the National Pension Service as the core of retirement income security, have the basic pension serve the government's role of addressing elderly poverty, and turn retirement pensions into a fund to be nurtured as a 'second National Pension Service.' He added that if a structure is created in which institutional investors participate in the market over the long term through retirement pensions, similar to the US 401(k), the high volatility of the domestic stock market could also ease.

He also announced plans to grow Jeonju into a global financial hub akin to Davos through an international finance conference, tentatively titled 'The Progressive Finance Forum,' to be held there starting September 3. In addition, to address younger generations' distrust of the National Pension Service, he said the NPS will encourage early enrollment through university lectures, military outreach, and a program starting next year to support first-ever premium payments for those turning 18.

Regarding the phenomenon of SK Hynix workers preferring cash over stock, the view was presented that this should be understood not as a failure of individual judgment by workers, but as a result of the company's neglect of internal investor relations. It was also noted that, statistically, people who invest in their own company's stock often end up among the worst-performing investors.

It was pointed out that companies actively conduct IR activities for outside investors, yet fail to properly explain the company's vision and growth story to the very workers employed there. At global companies, it is common practice to hold separate briefing sessions for employees at earnings time, but domestic companies lack this kind of internal communication effort, leaving employees without real conviction in their own company's stock.

In this context, it was suggested that before paying performance bonuses in stock, companies should hold in-house seminars explaining the outlook for the semiconductor industry or HBM market share, for example. However, it was stressed that this phenomenon should not be misinterpreted as a basis for blaming workers, and should instead be viewed alongside its root cause—the absence of communication effort on the company's part.