KOSPI near 3,900... Samsung Electronics and SK Hynix 'record-high march' despite taking a breather [Preview of today's market]

On the 22nd, the KOSPI is expected to start higher, eyeing a突破 above the 3,900 level. Securities firms say the index's uptrend will continue centered on earnings-based sectors.

Shipbuilding, automakers, and parts stocks in a record-high rally

According to the Korea Exchange on the 22nd, Hyundai Motor, Kia, HD Hyundai Heavy Industries, HD Hyundai Heavy Industries and U.K., Korea Shipbuilding & Offshore Engineering, Korea Electric Power Corporation and others recorded new 52-week highs during the session the previous day.

Hyundai Motor and Kia each rose to 267,000 won and 119,800 won respectively, both setting new record highs, and HD Hyundai Heavy Industries, HD Hyundai Mipo Dockyard, and HD Hyundai Heavy Industries & Shipbuilding all of HD Hyundai Group's three shipbuilders also hit new highs. Samsung Heavy Industries also surged intraday to 23,900 won and maintained its strength.

The sharp rise in the shipbuilding sector is interpreted as reflecting expectations after the U.S. announced plans to strengthen cooperation with Korea to rebuild its shipbuilding industry. Related stocks broadly strengthened amid suggestions that Korean shipbuilders could expand orders in connection with the 'MASGA (Make American Shipbuilding Great Again)' project.

Also, with a Korea-U.S. summit scheduled during the Asia-Pacific Economic Cooperation (APEC) summit, expectations that a plan to lower tariffs on major items such as automobiles and shipbuilding from 25% to 15% would be discussed helped improve investor sentiment.

As U.S. Apple shares surged to an all-time high, an 'Apple-driven tailwind' also blew through domestic related parts stocks. LG Innotek rose to 230,500 won the previous day to set a new high, and Samsung Electro-Mechanics and Jahwa Electronics also reached record highs at 221,000 won and 23,700 won respectively.

However, the upward trend did not hold through the close. As profit-taking emerged in the afternoon, the KOSPI, which had risen as high as 3,893.06, gave up part of its gains. Samsung Electronics, which was on the verge of the '100,000-won' mark right after the open, and SK Hynix, which had surpassed the '500,000-won' level, turned lower and weighed on the index.

"Samsung Electronics and SK Hynix stocks will go further"

Nevertheless, the stock outlooks for Samsung Electronics and SK Hynix remain positive. Experts say the semiconductor sector's long-term growth potential and room for valuation improvement are still large.

Kim Dong-won, a researcher at KB Securities, said, "Samsung Electronics is expected to achieve its largest operating profit next year, the biggest in eight years since 2018, and SK Hynix is expected to record its largest results for three consecutive years since 2023."

He added, "Next year, KOSPI operating profit is expected to increase by 91 trillion won from the previous year, and semiconductors will account for 55% of the increase," and forecasted, "Samsung Electronics and SK Hynix will lead the KOSPI's overall profit growth with respective shares of 31% and 24%."

He also said, "Considering cases since 1985 in which the KOSPI's price-to-book ratio (PBR) rose from 0.52x to 1.8x, next year the semiconductor sector is also likely to enter a phase of simultaneous expansion of profits and valuation," adding, "Both companies have sufficient medium- to long-term upside."

U.S. markets, Dow hits an all-time high... "Q3 corporate earnings drove the rise"

On the 21st (local time), New York markets closed mixed as third-quarter corporate earnings were generally reported as solid. The Dow Jones Industrial Average rose 0.47% to 46,924.74, hitting an all-time high, the S&P 500 rose 0.00% to 6,735.35, and the tech-heavy Nasdaq closed down 0.16% at 22,953.67.

Strong results in cyclical sectors such as industrials, consumer goods, and capital goods drove the Dow's rise, but weakness in growth stocks and semiconductor stocks weighed on the Nasdaq.

The market is pricing in a high probability that the U.S. central bank (Fed) will cut the policy rate by an additional 0.25 percentage point at the FOMC meeting on October 28–29. However, with some key economic data releases delayed due to a U.S. government shutdown, markets are expected to react sensitively in the short term to earnings, policy, and remarks.

Reporter Park Ju-yeon grumpy_cat@hankyung.com