South Korea’s benchmark stock index Kospi climbed above 3,900 points to a fresh record high on Friday, putting the long-anticipated and symbolic 4,000 mark within sight, as easing US-China trade tensions and renewed enthusiasm for artificial intelligence shares fueled investor optimism.
The Kospi rose 2.5% to close at a record 3,941.59, extending a sharp rally that began after breaking the 3,800 level just five trading days earlier.
The index hit an intraday high of 3,951.07 on Friday, also a record.
Regional markets gained as well, with Japan’s Nikkei 225 up 1.35% and China’s Shanghai Composite up 0.56%.
Analysts said sentiment improved after Intel Corp. reported stronger-than-expected third-quarter earnings overnight, reigniting the global “AI rally.”
SK HYNIX, SAMSUNG’S COMBINED MARKET VALUE AT RECORD $709 BILLION
Korea’s SK Hynix Inc., the leading supplier of AI chips, known as high-bandwidth memory (HBM), saw its shares jump 6.58% to 510,000 won on Friday, closing above the 500,000 won level for the first time since joining the SK Group.
Crosstown rival Samsung Electronics Co. rose 2.38% to 98,800 won, bringing the stock to the brink of the long-awaited “shipman Samsung,” or the 100,000 won Samsung milestone.
The combined market value of Samsung and SK Hynix reached 1,019 trillion won ($709 billion), almost double the 522 trillion won recorded a year ago, underscoring the dominance of semiconductor stocks in the Kospi’s ascent.
Market strategists see further upside for the benchmark through next year.
“If the Kospi’s forward 12-month price-to-earnings ratio (PER) returns to its previous peak of 13 times, the index could rise to 4,400,” said Kim Tae-hong, chief executive of Growth Hill Asset Management.
APR, YG ENTERTAINMENT STAND IN LINE FOR NEXT TAKEOFF
Still, as the third-quarter earnings season unfolds, some analysts expect funds to rotate out of the chip giants into other companies forecast to post robust results.
Among the likely beneficiaries are APR Co., a fast-growing skincare brand operator, and entertainment agency YG Entertainment Inc.
According to market tracker FnGuide Inc., APR’s third-quarter revenue and operating profit are estimated at 370.9 billion won and 85.9 billion won, respectively, revised up by 0.9% and 40.1% from a forecast of three months earlier.
Yet, its shares have fallen 4.6% so far this month as foreign investors continued to concentrate more than 90% of fund inflows into semiconductor stocks, analysts said.
“APR’s Medicube line of products saw its sales rise to rank second in Amazon’s skincare category, and we estimate its US and European revenue surged 238% and 297% in the third quarter from a year ago,” said Lee Ga-young, a Samsung Securities Co. analyst. “Expansion of offline stores in the US, Europe and Japan will likely sustain its earnings growth momentum.”
YG Entertainment has also seen upward revisions in profit forecasts but a decline in share price.
Analysts expect the company’s third-quarter operating profit to reach 32.5 billion won, up 20.6% from a forecast three months earlier.
Hyundai Motor Securities Co. estimates that YG Entertainment’s leading girl group band Blackpink’s ongoing world tour will attract 2.5 million to 3 million fans.
Expectations are also building for boyband group Big Bang’s 20th-anniversary album and tour next year.
YG’s shares, however, have dropped 7.36% this month.
DISPLAY MAKERS, FINANCIAL TITLES
LG Display Co.’s earnings outlook is also bright, with the market consensus operating profit for the third quarter jumping 30.2% in the past month to 440.4 billion won – an 80% increase from a projection three months ago.
Rising OLED panel shipments for Apple Inc. devices and Japan Display Inc. (JDI)’s withdrawal from the Apple Watch OLED market are expected to boost LG’s profits, analysts said.
Despite the rosy outlook, LG Display’s shares have declined 4.44% this month as investors locked in profits.
In the financial sector, earnings estimates for BNK Financial Group Inc. and KB Financial Group have been raised modestly, but both stocks have slipped, down 3.08% and 1.47%, respectively, amid continued caution over interest rate trends.
With the Kospi now within 60 points of the 4,000 milestone, analysts said investors are weighing whether the current AI and semiconductor-fueled rally can broaden out into other sectors, or whether it remains a two-chip story dominated by Samsung and SK Hynix.
By Sung-Mi Shim
smshim@hankyung.com
In-Soo Nam edited this article.
