Samsung, SK Hynix Face 'Super Week' as Earnings, ADR Listing Test Kospi Rally

Kospi projected to trade in a 7,200-9,000 range

Samsung Electronics to post earnings on July 7; SK Hynix ADR to list on July 10

June FOMC minutes due July 9 as investors gauge Fed stance

South Korea's stock market enters the second-quarter earnings season in earnest this week, from July 6 to July 10, starting with Samsung Electronics Co.'s preliminary results. Securities firms said on July 5 that the market's direction will depend on whether earnings can revive investor sentiment after semiconductor shares slid on worries over a slowdown in artificial intelligence investment.

The Kospi closed at 8,088.34 on July 3, up 5.76%, recovering the 8,000 mark. NH Investment & Securities projected the benchmark would trade in a 7,200 to 9,000 range this week. Na Jung-hwan, an analyst at the firm, cited rising second-quarter earnings estimates as an upside factor and concerns over slower AI capital expenditure and uncertainty around Federal Reserve policy as downside risks.

Those concerns spread last week after a report said Meta Platforms Inc. was considering entering the cloud business by leasing its in-house AI infrastructure to outside companies. That spurred speculation that Meta may focus on monetizing existing infrastructure rather than investing in new data centers, weighing on sentiment toward chip stocks.

Na said he viewed that as noise rather than a signal because it does not point to weaker demand for AI computing. In his view, the strategy is aimed at improving returns on infrastructure that has already been built, not signaling slower AI demand or a reduction in capital spending.

Investor attention is now turning to key events involving South Korea's leading chipmakers this week. Samsung Electronics is set to release preliminary second-quarter earnings on July 7, while SK Hynix Inc. will list American depositary receipts on Nasdaq on July 10.

Samsung's earnings could help ease concerns over slowing AI investment and raise market expectations for the memory sector again. SK Hynix's ADR listing is also feeding hopes that easier access for overseas investors will attract more global liquidity and prompt a reassessment of the company's valuation.

Samsung's preliminary earnings are the main near-term catalyst, Na said. If operating profit comes in well above the consensus estimate, it would signal strength in the memory market and could turn selling sentiment into holding and follow-through buying.

Lee Kyung-min, an analyst at Daishin Securities, said South Korea's stock market will enter the full-fledged second-quarter pre-earnings season this week, when estimates are revised just before results are announced. He called Samsung's preliminary earnings a turning point.

Lee said Samsung's three-month consensus for second-quarter operating profit stands at 8.56 trillion won, while the one-month estimate is 8.48 trillion won. Although earnings forecasts have been trimmed slightly amid recent debate over semiconductor demand, profitability and the reflection of incentives, profit momentum remains clear, he said.

If second-quarter results come in better than expected, a sharp rebound could follow, Lee said. Even if they fall short of expectations, sentiment could still improve as long as the numbers do not amount to a shock, as uncertainty would ease and the stock's valuation appeal could be reassessed.

Analysts are also urging investors to distinguish noise from genuine signals in the semiconductor sector. Kang Jin-hyuk, an analyst at Shinhan Securities, said the second half has begun with an unwinding of flows that had been concentrated in chip shares, making that distinction increasingly important.

Investors will have to endure the noise until clearer signals emerge on the direction of AI capital spending, Kang added. He pointed to Samsung's preliminary earnings, events related to SK Hynix and late-July guidance from big tech companies on free cash flow and capital expenditure as key indicators.

US monetary policy is another market variable this week. Kim Yoo-mi, an analyst at Kiwoom Securities, said concerns about further tightening may ease somewhat as investors stay cautious ahead of the Fed's next policy signals. With West Texas Intermediate crude trading below $70 a barrel, inflation pressure tied to energy prices is also easing, she added.

Kim said the June Federal Open Market Committee minutes, due on July 9, will be a key event. The minutes should offer clues on how Fed officials assessed inflation, the labor market and the need for additional rate increases.

Kim Yeon-ji, Hankyung.com reporter kongzi@hankyung.com