Hana Securities picked shareholder returns by Samsung Electronics and SK hynix, Nvidia's earnings, and U.S. long-term interest rates after the Jackson Hole meeting as the "three checkpoints" that will determine whether the KOSPI rises further. Large-scale shareholder returns can support the index floor and corporations' profits can back that up, but the key variable that will ultimately decide the magnitude of the KOSPI's gains is U.S. rates, the analysis said.
On the 25th, Kim Doo-eon, an analyst at Hana Securities, said in a report, "Cash creates a market bottom, and profits defend that bottom," and noted, "How far the market rises is ultimately decided by interest rates."
The first checkpoint is shareholder returns by Samsung Electronics and SK hynix. Samsung Electronics presented shareholder returns this year of 90 trillion to 110 trillion won. That is about five times the previous record high of 20.3 trillion won in 2020. In the third quarter, it will pay about 30 trillion won in cash dividends, including the regular dividends, and it plans to finalize in Jan. next year the combination of 60 trillion to 80 trillion won in dividends and share buybacks and cancellations.
By contrast, SK hynix will spend 40 trillion won from the 20th of this month to Nov. 19 to buy about 24.07 million treasury shares and cancel them all. That amounts to about 3.3% of total shares outstanding.
Kim said, "Samsung Electronics' large-scale cash returns support the index floor, but in terms of execution speed and foreign investor flows, SK hynix is further ahead." In particular, as foreign ownership in Samsung Electronics reached 46% at the end of the second quarter, Kim viewed whether foreigners turn net buyers after the shareholder return announcement as important. The won-dollar exchange rate, which has recently fallen to the 1,380-won range, was also cited as a supportive factor for foreign inflows.
The second checkpoint is Nvidia's fiscal 2027 second-quarter results, scheduled for 6 a.m. on the 27th. The market's revenue forecast is about $91.9 billion, and adjusted earnings per share (EPS) is about $2.08. Expectations for third-quarter revenue have already risen to around $103.0 billion.
However, simply beating market expectations is unlikely to drive additional gains in domestic semiconductor stocks. Whether HBM4, used in Nvidia's next-generation "Rubin" GPU, becomes concrete in terms of actual Production yield, supply contracts, and 2027 supply volume could determine further gains for Samsung Electronics and SK hynix, the explanation said.
Kim analyzed, "For Nvidia, additional gains in Korean semiconductors are possible only if it proves not just the heightened earnings expectations but also HBM4 Production yield, supply contracts, and 2027 volumes." Kim added that since the KOSPI's moves after past Nvidia earnings were not consistent, past statistics should be seen as an indicator of potential volatility expansion rather than a sell signal.
The final checkpoint is the Jackson Hole meeting, to be held from the 27th to the 29th, and the subsequent trend in U.S. long-term rates. The market is watching whether Kevin Warsh, chair of the Federal Reserve (Fed), will present a new rationale to cut rates further.
Increased demand for U.S. short-term Treasurys due to the expansion of stablecoins is also cited as a factor for rate declines, but the effect should not be overestimated, the analysis said. If bank deposits move into stablecoins, it is closer to a shift of existing funds than the creation of new liquidity, and any rate-lowering effect is also more likely to concentrate on short-term rather than long-term bonds.
Treasury buybacks by the U.S. Treasury would help improve market liquidity, but were assessed as too small in scale to resolve fiscal problems themselves.
Hana Securities expects the KOSPI to show a "root-shaped (√) rebound" after the sharp drop in July. In August, the KOSPI is up 31.4% from its low. Samsung Electronics' cash returns can support the downside, but heightened earnings expectations for Nvidia and instability in U.S. long-term rates could cap the upside, the firm said.
Kim said, "Now is the time to pick stocks rather than blindly follow the index," adding, "It is worth focusing on large caps that foreigners are buying again, semiconductor corporations where HBM4 mass production and supply contracts are becoming concrete, and corporations that show shareholder returns through actions rather than words."