Korean chip stocks surged! Anticipation of Temasek acquiring Samsung and SK Hynix is ​​expected to boost foreign investment back into the market.

News reports that Temasek is preparing to invest in Samsung Electronics and SK Hynix have sparked buying in Korean tech stocks, pushing the Kospi index up more than 5% amid hopes that chip stocks are passing their bottom.

On August 12, 2569, at 12.30:XNUMX a.m., Bloomberg News reported that Shares of South Korean chipmakers rose sharply as investor sentiment turned positive due to renewed buying interest following heavy selling last month. Meanwhile, investors reacted positively to local media reports that Temasek Holdings Pte., Singapore's national wealth fund, is considering investing in Samsung Electronics and SK Hynix.

Shares of Samsung and SK Hynix surged more than 8% during trading after Asia Business Daily reported that Temasek planned to make direct investments in the two chipmakers through its internal investment team and was considering the right timing. Meanwhile, South Korea's Kospi index climbed as much as 5.1%.

Homin Lee, Senior Macrostrategist at Lombard Odier Singapore. It was stated that the news reflects the fact that long-term investors are beginning to show renewed interest in South Korea's semiconductor sector, which is currently trading significantly below its fundamental value. Furthermore, if volatility from retail investor trading decreases, large foreign investors are likely to see more opportunities to invest in this sector.

Previously, Samsung and SK Hynix shares faced heavy selling pressure in July as investors began questioning the sustainability of their AI infrastructure investments, leading to rapid closing of leveraged positions. However, share prices have recovered recently on expectations that both companies will increase shareholder returns through share buyback programs and higher dividend payments.

Last Friday, SK Hynix revealed it would announce details of its shareholder return policy in the third quarter. Meanwhile, analysts at KB Securities expect Samsung Electronics to follow suit, potentially increasing shareholder returns by more than tenfold from their current level.

Following a correction in July, the share prices of the two memory chip manufacturers fell to record lows, with Samsung trading at a forward P/E ratio of just 4.2x and SK Hynix at 3.6x, compared to the Philadelphia Semiconductor Index, which represents global chip stocks and has an average P/E ratio of over 21x.

The latest data also indicates that foreign investors had bought more than 2 trillion won, or approximately US$1.4 billion, worth of shares on the Kospi market by mid-Wednesday, while retail investors continued to be net sellers.

Ha Seok-keun, Chief Investment Officer of Eugene Asset Management, said that if Temasek's investment is confirmed, it would be a significant signal reflecting foreign investors' confidence in the growth cycle of South Korea's AI and memory chip businesses, and would be another factor supporting the recovery of the Kospi stock market in the coming period.

refer : bloomberg.com

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