U.S. and Korean Markets Diverge Ahead of Samsung Electronics Earnings…Chip Flows and Shareholder Returns in Focus

The KOSPI fell 0.9% to 6,877, while the KOSDAQ declined 1.6% to 904, remaining above the 900 mark. Foreign investors were net sellers of KRW 1.3 trillion worth of stocks on the Korea Exchange and about KRW 250 billion on the KOSDAQ, and also held a net-selling position in the futures market. Early in the session, Samsung Electronics rose more than 2% and SK hynix limited its losses, raising hopes for a rebound, but the indexes weakened as the afternoon progressed.

Short-term supply and demand was cited as a reason for continued foreign selling, despite little change in earnings outlooks for Samsung Electronics and SK hynix. Foreign ownership in Samsung Electronics and SK hynix was cited at 46.4% and 49.8%, respectively, compared with nearly 70% for TSMC. The KOSPI has nearly doubled over the past year, while the Nasdaq has gained only about 20%, and the burden of short-term gains and a preference for the U.S. market may have contributed to selling in Korea.

It was also noted that foreign investors tend to use share buybacks as an opportunity to sell. Samsung Electronics' buyback could end as early as that day, while SK hynix's is scheduled to conclude about a week later. Selling ahead of the end of the buybacks and profit-taking could therefore unsettle market flows. However, some expected that once the buybacks ended, rebalancing and profit-taking would run their course, allowing investors to refocus on underlying flows and corporate value after Samsung Electronics' earnings announcement.

Singapore-based DBS said Nvidia's valuation could support the view that the AI rally is not a bubble. Its argument was that Nvidia's 11-month forward price-to-earnings ratio is about 15 times, far below Cisco Systems' forward P/E of 100 times during the dot-com bubble. DBS forecast earnings growth of about 70% next year and said the tailwinds for AI semiconductors remain intact. It also recommended a barbell strategy combining AI growth stocks with investment-grade bonds.

Samsung Electronics was due to release preliminary earnings the following day. Market operating profit estimates were generally in the KRW 101 trillion to KRW 109 trillion range, with a midpoint of about KRW 104 trillion. Kim Sun-woo, a researcher at Meritz Securities, put his estimate at around KRW 106 trillion, while host Lee Kwang-soo noted that he had previously forecast about KRW 118 trillion. Earnings that usher in an era of KRW 100 trillion in quarterly operating profit could support market expectations, but attention is expected to shift after the announcement to the outlook for the fourth quarter and 2027.

Kim Dong-won, head of research at KB Securities, forecast that Samsung Electronics' HBM selling prices in 2027 could rise by more than 100% quarter on quarter. He projected that HBM4 would account for 40% of Samsung Electronics' revenue in 2026 and 80% in 2027. Industry forecasts reported that Samsung Electronics had proposed HBM prices substantially above previous levels, but it was also noted that the company might not release detailed business outlooks or shareholder policies on the day of its preliminary earnings announcement.

The AI semiconductor ecosystem was described as one in which Nvidia designs chips, TSMC manufactures them, and Samsung Electronics and SK hynix supply HBM. While Nvidia dominates the market, AMD is challenging it in accelerators, and major technology companies including Google, Amazon, Meta, and Microsoft are expanding their in-house chip development. The growing businesses of Broadcom and Marvell Technology, which support custom chip design, were interpreted as a sign that the AI infrastructure market is broadening.

At its investor day, Marvell set a fiscal 2028 revenue target of $20 billion. This is above the market consensus of $18.2 billion, and the company also set a fiscal 2031 revenue target of $70 billion to $90 billion. It cited rising demand for custom chips and networking chips driven by the global buildout of AI infrastructure as growth drivers. Marvell rose more than 10% intraday in New York before closing up 5.8%, while AMD gained 2.8% to reach a record high.

AMD and major technology companies use strategies such as improving performance or lowering prices to compete with Nvidia through their in-house chips. Increasing HBM capacity is important to improving performance, while design partners such as Broadcom and Marvell are involved in producing custom chips. These companies' growth outlooks point to the possibility of continued expansion in AI chips and data center investment, which could also affect demand and prices for HBM, where supply is limited. However, whether the memory upcycle will prove more than just a cycle, and whether companies can demonstrate earnings durability through long-term contracts and shareholder returns, were identified as conditions for a re-rating of Korean semiconductor companies.

U.S. nuclear power company Constellation Energy signed a long-term power supply agreement worth $1 billion with Google. The deal underscored how major technology companies are moving directly to secure reliable power as AI data centers expand, prompting early gains in nuclear power, power equipment, and cable stocks. So Nyeonjeong, a researcher at Yuanta Securities, also said that more big tech companies are directly securing not only electricity but also power infrastructure and equipment.

It was seen as natural for sectors such as cables, transformers, and distribution equipment—areas needed immediately by the power grid—to react first, given that new supply from large-scale generation sources such as nuclear power takes time. If the model of big tech companies signing long-term agreements with power producers and directly securing equipment to address power shortages spreads, the pool of related customers could expand. This could create opportunities for Korean companies capable of supplying high-value power equipment, given U.S.-China relations.

The Nuri launch vehicle proceeded through its launch sequence during the broadcast and entered normal flight, with separation of the first stage also confirmed. Deployment of five microsatellites in a cluster was completed, and the CubeSat deployment sequence continued. The onboard satellites were described as carrying out different missions, including weather observation.

The launch was presented as an example of South Korea's capabilities in launch vehicle and satellite development. With each stage proceeding normally through satellite deployment, expectations for a successful launch grew. Plans for additional launches were also mentioned, but no specific schedule or project scale was provided.

While semiconductor stocks were weak, cosmetics stocks including Amorepacific, Kolmar Korea, and Cosmax rose. Data were cited showing that K-beauty's share of the U.S. imported cosmetics market had increased from the low 20% range to 26.5%. Cosmetics exports have also remained at record levels, prompting analysis that growth could once again draw attention during earnings season.

It was emphasized that Korean brands could have room for further growth by gaining market share even if the U.S. cosmetics market itself slows. Increasing share in a market marked by intense competition and tighter regulation was seen as a sign of brand and product competitiveness. Although companies face the burden of complying with regulations related to packaging, the environment, and chemicals, there were also expectations that Korean companies could manage these requirements and expand their market presence.

K-beauty exports are expanding beyond skincare products to include items such as shampoo. The growing use of existing Korean products by local consumers was also cited as evidence of the quality of that growth. However, given past concerns about limits to growth in the U.S. market following stock price gains, it will be important to see whether market share continues to expand and product ranges diversify, rather than focusing only on market size.

International oil prices rose as reports of attacks involving the Houthis and Saudi Arabia continued and footage showed flames spreading at Saudi Aramco's Khurais oil facility. Higher oil prices put downward pressure on U.S. Treasury yields and stock futures, and were cited as a factor behind the larger afternoon losses in Korean equities. Some argued, however, that it was too early to conclude that the trend had changed based on that day's oil price movements alone.

The International Energy Agency said it would flesh out plans for a G7 release of strategic reserves at its October 14–15 meeting. The news helped limit further sharp increases in oil prices. Whether concerns about disruptions to energy supplies actually intensify, and how effective the response through strategic reserves proves to be, remain key market variables.

U.S. Treasury Secretary Scott Bessent said the aim was to begin reversing the trend in the national debt-to-GDP ratio. While no specific measures were announced, the remarks raised hopes that the government could respond to market demands to manage Treasury issuance and the fiscal burden. Amid a pattern in which rising U.S. Treasury yields spread to Europe and then weighed on U.S. markets, the message on fiscal management was taken as a factor that could ease interest-rate concerns.

In France, Marine Le Pen, leader of the National Rally, shifted her position toward emphasizing fiscal discipline. Le Pen set a goal of restoring a primary budget balance within 18 months and reducing the fiscal deficit to below 3% of GDP by 2030. France is due to publish its revised budget for next year this Friday, making the extent to which the actual budget can ease fiscal concerns a key issue.

French government bond yields fell on these remarks and policy expectations, and easing fiscal worries in Europe also helped stabilize U.S. markets. In the United States, AI-related earnings expectations and easing interest-rate concerns combined to push the S&P 500 and Nasdaq to record highs. FactSet expected S&P 500 companies' earnings to grow in the third quarter, with technology stocks' earnings per share forecast to rise by about 66% in particular.

Frequently checking stock prices may be driven by excitement, but if it is repeated out of anxiety, it is worth reassessing one's investment approach. Anxiety may stem from unclear reasons for buying, excessive volatility in a stock, an investment amount that is difficult to bear, or losses that have grown too large. Buying solely on the recommendation of friends or online sources can weaken the rationale for holding a company, making it easier to be shaken by even small price moves.

Recording the reasons for a purchase, investing within one's means, and managing volatility and the risk of loss are necessary for long-term investing. Higher volatility does not necessarily mean higher expected returns, and investing more money does not necessarily improve returns. When losses mount, adjusting position sizes to reduce risk is also worth considering.

Rather than comparing oneself with other people's gains or daily market moves, it is important to establish personal criteria and an investment horizon. The goal, the argument goes, is not to predict daily price changes but to remain in the market for the long term. Especially when markets move sideways, refining one's ability to assess companies and one's selection criteria can help reduce anxiety and sustain investing.