KOSPI Falls Below 6,000 Despite Samsung Electronics’ Record Results as Uncertainty Over Shareholder Returns Weighs on Sentiment

The KOSPI fell more than 2% intraday to trade around 5,887 points, while the KOSDAQ dropped about 2.4% to 752 points. The indices later pared some losses, but the KOSPI remained near 5,885 points and the KOSDAQ near 748 points. A pause after the previous day’s strength had been expected, but a sharp decline in Samsung Electronics deepened the market’s losses.

Foreign investors continued to be net buyers in the KOSPI cash market, although the scale of their purchases gradually diminished. In the futures market, foreign investors turned to net selling. After showing volatility the previous day, the won–dollar exchange rate fell 8 won and 40 jeon to 1,333 won and 60 jeon.

SK hynix set its shareholder returns for 2026 at KRW 100 trillion. Under its existing target of returning at least 50% of free cash flow, the company plans to allocate KRW 60 trillion to treasury share purchases and cancellations and KRW 40 trillion to cash dividends. It plans to cancel KRW 40 trillion in treasury shares purchased earlier, and divide its remaining KRW 20 trillion in capacity for share purchases between KRW 10 trillion for shareholder returns and KRW 10 trillion for employee compensation.

Additional treasury share purchases are scheduled to run from October 29, 2026, to January 28, 2027. The company decided to pay a third-quarter dividend of KRW 20,000 per share, comprising KRW 10,000 in earnings-based dividends and a KRW 10,000 special dividend to share returns from its Kioxia investment. Investors took note of the specific return plan, which includes KRW 10 trillion in third-quarter treasury share purchases and about KRW 14 trillion in cash dividends.

The company said it would determine cash dividends in line with operating results and provide additional returns through special dividends when it generates substantial investment gains. It also plans to continue buying back treasury shares each quarter, setting the amount based on its share price, market conditions and cash flow. The shareholder return policy was seen as a major shift from the previous dividend of around KRW 300 per share.

Samsung Electronics reported third-quarter operating profit of about KRW 10.7 trillion, including approximately KRW 10.6 trillion from its semiconductor division. Key figures largely matched the preliminary results, and the semiconductor division’s operating margin exceeded 70%. Specific profit-and-loss figures for the foundry division were not disclosed.

Samsung Electronics set total third-quarter cash dividends at about KRW 3 trillion, with dividends of KRW 4,601 per common and preferred share. It forecast shareholder returns of KRW 90 trillion to KRW 110 trillion in 2026 and said that the KRW 55 trillion to KRW 75 trillion remaining after excluding KRW 35 trillion in returns already committed would include cash dividends and a substantial amount of treasury share purchases and cancellations. The company also said it would actively consider the proportion of preferred shares in future buybacks and cancellations, taking into account the price difference between common and preferred shares.

The next shareholder return policy is scheduled to be announced at a board meeting in late January 2027. The market focused, however, on the KRW 20 trillion range in the projected return amount and the lack of clarity on how the remaining funds would be divided between dividends and treasury share purchases and cancellations. After the announcement, Samsung Electronics shares fell about 5% intraday, slipping below KRW 230,000.

Samsung Electronics said it had signed long-term supply contracts with 10 major customers and was in discussions with additional customers. It is expanding its customer base beyond hyperscalers, server original design manufacturers and system-on-chip companies to include mobile, automotive and networking businesses. The company also set a target of raising long-term supply contracts to 60–70% of its production capacity by 2030.

Revenue from HBM4 more than tripled in the third quarter from the previous quarter, and the company said it had also received positive feedback from customers on HBM2. It said negotiations for 2027 HBM supply volumes had been completed at prices in line with its target, and that additional supply requests were continuing even though planned volumes had already been sold out.

Signals of semiconductor demand and HBM business growth are positive, but some observers said the market was left to draw its own conclusions because the company did not provide details on contract terms, progress in additional negotiations or the extent to which it was meeting its long-term supply contract target. Others said Samsung Electronics was rapidly catching up in HBM competition and that there were grounds to expect its market share to rise next year.

Samsung SDI reported third-quarter revenue of more than KRW 4 trillion and operating profit in the KRW 400 billion range, exceeding market expectations. Revenue was about 16% above forecasts and operating profit about 114% higher. The company returned to profitability amid expectations of a battery market recovery, but its shares fluctuated between gains and losses intraday as the broader market weakened.

The company said it had secured orders through 2028 and was targeting commercialization of solid-state batteries in the second half of 2027. Improving results and order visibility sustained expectations of a turnaround among secondary battery companies.

Alphabet’s revenue fell short of market expectations, as did advertising revenue from Search and YouTube. Free cash flow came to a deficit of USD 9.1 billion, substantially worse than the market forecast of a USD 2.7 billion deficit, while operating cash flow was reported at USD 42.3 billion, below the expected USD 52.7 billion. Alphabet shares fell about 9% after the results were announced.

Microsoft’s revenue, adjusted earnings per share and operating profit met or exceeded market expectations. Azure, its cloud business, generated USD 33.2 billion in revenue, above forecasts, while AI-related revenue rose 48% year over year, outpacing the market’s expected growth rate of 44%. Shares gained about 4%, with investors also interpreting capital expenditure pressures as lower than expected.

The difference between the two companies was also evident in their AI strategies and investment burdens. Alphabet is pursuing a full-stack strategy that combines in-house chips, the Gemini model, cloud services and consumer products, while continuing large-scale investment. Microsoft, by contrast, works with OpenAI and focuses on providing infrastructure and software platforms, putting the companies’ approaches to AI monetization and investment efficiency in comparison.

Korea Hydro & Nuclear Power (KHNP) ended negotiations with the construction company for the Czech Republic’s Dukovany nuclear plant and decided to pursue a competitive bid for a new contractor. The sticking points were construction costs, contract structure, scope of work and allocation of responsibility. KHNP sought a lump-sum contract with the price fixed during the basic design phase, while the contractor demanded additional payments for increased work volumes after detailed design.

KHNP plans to maintain its schedule to begin main construction in November 2029, but it remains uncertain whether the time required for a new contractor to take part in design and permitting can be shortened. Concerns about delays therefore remain. Shares of nuclear-related companies, including Doosan Enerbility and Hyundai Engineering & Construction, plunged on the news, with Doosan Enerbility falling more than 10% intraday.

A contractor may seek flexibility in contract terms to account for the risk of changes in costs and construction volumes. If the original contract was won at a low price, leaving KHNP little room to revise the terms, concerns have emerged that profitability issues could recur even if a new contractor is selected. Observers said that any future renegotiation or new bidding process should consider both the structure of the prime contract and the contractor’s profitability.

The U.S. Federal Reserve held its benchmark rate steady, but markets priced in about an 85% probability of a rate hike in December. The Fed said energy prices had recently risen, economic activity remained solid, and gross domestic product and employment were also healthy. It also indicated that while financial conditions were tighter than before, it was difficult to conclude that they were sufficiently restrictive.

The Fed said it would, from 2027, convert one of its eight annual meetings into a meeting focused solely on monetary policy strategy, without a rate decision or statement, and that it planned to increase the number of strategy meetings to two in 2028. It has not decided how much of the strategy meeting outcomes and minutes will be disclosed. Further clarification is needed on whether adjusting the number of meetings will reduce market uncertainty or instead increase it by limiting the information made public.

The Fed chair said there was keen interest in the Korean economy and technology supply chains. The remarks indicated that the Fed was monitoring the roles of South Korea, Japan and Singapore in the supply of critical components, including semiconductors.

The second Korea Grand Festival will run from October 29 to November 15. Participating sectors include department stores, large retailers, convenience stores, automobiles and home appliances, dining and lodging, with discounts, gift certificates and benefits for local businesses on offer. The event also includes benefits for tourism and culture and for foreign visitors.

Small and medium-sized businesses, small merchants and traditional markets are also taking part. Given the festival’s aim of supporting spending in sectors struggling with weak domestic demand, some said it was important for consumers to purchase goods and services they need, helping channel spending into local commercial districts.

Lee Kwang-soo said ambiguity in Samsung Electronics’ shareholder return announcement, rather than its earnings, had deepened the share price decline. If the company provides only a range of KRW 90 trillion to KRW 110 trillion, investors have to estimate the actual amount to be returned themselves. He argued that an earnings announcement is an opportunity for a company to confirm figures the market has been calculating and thereby reduce uncertainty. He criticized the company for failing to say how much it would spend on treasury share purchases and cancellations, or how it would divide returns between cash dividends and treasury shares.

He also said the decision to pay the same amount per share to common and preferred shareholders, along with the statement that the company would actively consider the proportion of preferred shares in future buybacks and cancellations, left room for controversy. This did not mean that canceling preferred shares was inherently wrong, but there was concern that the announcement could be read as a signal that the company would avoid canceling common shares and concentrate returns on preferred shares. Lee emphasized that the company should clearly explain its decision-making criteria and governance constraints, given the potential for conflicting shareholder interests.

Lee made clear that speculation in the market that the company might be trying to lower its share price to reduce gift taxes could not be treated as fact. However, he said that when a company fails to answer key questions, investors are likely to connect the issue to matters such as the period used to calculate the share price before and after a gift, or the timing of the next board meeting. Lee argued that to dispel such suspicions, the company should bring forward its board meeting and present a specific, long-term return plan rather than waiting until January 2027.

Lee Kwang-soo interpreted Alphabet’s results as showing both growth in AI cloud services and pressure on its established advertising business. If consumers shift their search for information from Search and YouTube to AI services such as ChatGPT and Gemini, he said, the existing businesses of companies that have relied on search and advertising as core revenue sources could come under pressure. He said the location of the “first point of contact” where users initially seek information could reshape the flow of advertising and service use.

Lee said this shift could also pose a significant risk to Naver. If search activity moves to AI services, Naver could lose its position as the first point of contact for information searches. YouTube, too, could face competition for user attention and advertising revenue if AI services expand ad-supported free models.

He said AI investment had the character of a race for survival that could not be explained by short-term cash flow alone. The fear that companies could fall behind competitors if they stopped investing is sustaining investment, a trend that could support demand for AI infrastructure such as semiconductors and data centers. However, which strategy will secure a long-term advantage—the large-scale full-stack investment pursued by Alphabet or Microsoft’s platform-centered approach—remains to be seen.

Lee Kwang-soo said gains from investing can extend beyond individual profit and lead to consumption and charitable giving. Citing examples of people using part of their investment returns for family expenses or donations, he emphasized the value of a structure in which funds generated through market participation flow back into households and the local economy.

Rather than assuming that bonuses flow only into real estate, he said it was important to consider whether household spending, including that of semiconductor industry workers, reaches restaurants, shops and local commercial districts. The aim is not to encourage excessive spending, but to create a virtuous cycle in which necessary purchases help domestic demand and local economies recover together.