Samsung, SK Hynix Add $165 Billion in a Week as Chip Stocks Tighten Grip on Kospi

Chip Duo’s Dominance Deepens

Samsung, SK Hynix Account for 41% of Kospi Market Cap

In Taiwan, TSMC Alone Makes Up More Than 40%

The Kospi has reestablished itself above 6,000, with investor concentration in South Korea’s two biggest chipmakers growing more pronounced. With geopolitical uncertainty still lingering, funds are pouring into the market’s No. 1 and No. 2 companies by market value as investors seek stocks with clearer earnings momentum.

Data from the Korea Exchange showed Samsung Electronics and SK Hynix contributed 31.34 points and 20.40 points, respectively, to the Kospi’s 123.64-point, or 2.07%, gain on July 15. That easily outpaced other large-cap stocks such as Hyundai Motor, which contributed 2.61 points, and LG Energy Solution, at 2.43 points. Among the more than 800 stocks in the Kospi, the two chipmakers accounted for 41.8% of the day’s advance. That was higher than on Feb. 26, when the Kospi rose 223.41 points, or 3.67%, to a record high and the two companies made up 39.6% of the gain.

The pair’s weight in the domestic stock market has also increased. Of the Kospi’s total market capitalization of 4,995.5123 trillion won ($3.62 trillion) on July 15, Samsung Electronics accounted for 1,233.5647 trillion won ($894.7 billion) and SK Hynix for 809.6298 trillion won ($586.7 billion). Together they represented 40.9%, up 1 percentage point from 39.9% at the previous peak. Their combined market value has increased by about 227 trillion won ($164.5 billion) since July 7, just before the US and Iran agreed to a two-week ceasefire.

The tilt toward large semiconductor stocks is poised to deepen further. Helped by the chip supercycle, Samsung Electronics and SK Hynix are on course to post record annual operating profit this year. Some forecasts show both companies entering the global top three for operating profit next year. Brokerages have also been raising target prices for SK Hynix ahead of its earnings release on July 23. Over the past week, securities firms set targets between 1.3 million won ($942) and 1.9 million won ($1,377), implying upside of 14% to 57% from the July 15 close.

The pattern is not limited to South Korea. Focus Taiwan reported that TSMC’s intraday market capitalization topped NT$54 trillion, or about 2,500 trillion won, on July 15. TSMC alone accounts for more than 40% of Taiwan’s stock market.

Some brokerages say the heavy concentration of flows into semiconductor stocks may also be a time to look at undervalued names. Exporters in sectors such as defense, shipbuilding, power equipment and cosmetics, whose share prices have yet to fully reflect earnings, could enter a re-rating phase after first-quarter earnings announcements.

Lee Sun-a, Korea Economic Daily reporter suna@hankyung.com