Market Preview: Semiconductor Stocks Show Signs of Recovery Ahead of Key Earnings

The KOSPI index recovered above 8000 on July 3, as shown on the display board at Hana Bank's dealing room in Jung-gu, Seoul, where the closing prices of KOSPI, SK Hynix, and Samsung Electronics are displayed. On that day, the KOSPI rose by 440.25 points (5.76%) to close at 8088.34, while the KOSDAQ index increased by 1.69 points (0.19%) to finish at 868.41. [Photo: Yonhap News]

On July 6, the domestic stock market is expected to attempt a rebound, particularly in semiconductor stocks, as overseas factors are limited due to the U.S. market being closed the previous night. This week, significant events are on the horizon, including Samsung Electronics' preliminary second-quarter earnings and the listing of SK Hynix's American Depositary Receipts (ADR), which are anticipated to influence investor sentiment in the semiconductor sector.

As of 8:43 a.m., Samsung Electronics is up 3.3% and SK Hynix is up 1.2% in the NXT pre-market. Other notable movements include SK Square rising by 0.3%, Hyundai Motor by 0.2%, Hanwha Ocean by 4.7%, Doosan Enerbility by 2.0%, and Mirae Asset Securities by 7.3%. Conversely, Samsung Electro-Mechanics is down by 0.2%.

Analysts are watching to see if the investor sentiment, which was negatively impacted by last week's sharp decline in semiconductor stocks, will recover during this week's major events. They believe that the preliminary earnings report from Samsung Electronics and the SK Hynix ADR listing will have a more significant impact on market volatility than external factors such as the June Federal Open Market Committee (FOMC) minutes and key statements from Federal Reserve officials, as well as the U.S. ISM Services Purchasing Managers' Index (PMI) for June.

Han Ji-young, a researcher at Kiwoom Securities, stated, "This week, we expect the KOSPI to range between 7400 and 8600, with changes in semiconductor investment sentiment and sector rotation being key variables. Recently, trading volumes in single-stock leveraged products have exceeded 20% of KOSPI trading volumes, which could increase supply volatility. However, the KOSPI's price-to-earnings ratio (PER) has fallen below 7 for the first time since the financial crisis, indicating that valuation pressures are easing, which should limit downside risks for the index."

He added that while the market has high expectations for Samsung Electronics' preliminary earnings, there could be short-term volatility following the announcement. However, given that recent stock price adjustments have largely reflected these expectations and uncertainties, there is a possibility that investor sentiment may stabilize afterward. The SK Hynix ADR is expected to have a limited supply burden, as the new share issuance will account for only about 2.5% of the total shares, with the success of its debut in the U.S. market being a more critical factor for investor sentiment.

Han also noted, "This week, the changes in semiconductor investment sentiment and the sustainability of sector rotation will be the market's primary focus. Although macro events such as the June FOMC minutes are scheduled, the events that will influence market direction and volatility will be Samsung Electronics' preliminary earnings and the SK Hynix ADR listing."

He concluded, "While volatility may increase during the week, the KOSPI's valuation burden has dropped to its lowest level since the financial crisis, making it more appropriate to approach the market from a perspective of gradual buying during corrections rather than increasing cash holdings after selling."

Market experts also advise adopting an investment strategy that considers both short-term volatility and long-term growth potential.

Cha Eun-young, head of the Hana Bank Gold Club Yeouido PB Center, remarked, "The long-term growth potential of the semiconductor industry remains valid, but we must also consider the possibility of increased volatility following a short-term surge. It is essential to diversify across asset classes and investment timing rather than concentrating on specific stocks, while maintaining a long-term investment principle."

* This article has been translated by AI.