Key Takeaways
- The Kospi index in South Korea has climbed over 22% since hitting its July 30 bottom, officially entering bull market status
- Both Samsung Electronics and SK Hynix posted gains exceeding 5% on Thursday, driving the index upward
- A KB Securities analyst, Jeff Kim, describes the stocks as “extremely undervalued” following declines of over 40% from their highs
- Robust AI infrastructure spending by major technology companies has renewed optimism for memory chip markets
- International investors continue selling Korean equities, withdrawing over $100 billion in 2025
Samsung Electronics and SK Hynix have roared back into the spotlight following a devastating July correction, with an industry analyst labeling both semiconductor giants “extremely undervalued” as South Korea’s primary equity benchmark officially crossed into bull market territory.
Samsung Electronics Co., Ltd., SMSD.L
The Korean Kospi index jumped as high as 4.8% during Thursday’s session, pushing its cumulative advance from the July 30 trough to approximately 22%. This milestone exceeds the widely recognized 20% threshold that signals a bull market.
The turnaround has been remarkably swift. Only weeks ago, the Kospi plunged 22% in a single month—its steepest monthly decline since the 2008 financial crisis. The collapse stemmed from massive unwinding of leveraged positions concentrated in semiconductor stocks.
Samsung Electronics and SK Hynix spearheaded Thursday’s rally, with each company posting gains exceeding 5%. Both firms are dominant forces in memory chip manufacturing, a segment experiencing heightened demand amid accelerating AI infrastructure buildouts.
Analyst Highlights Significant Valuation Disconnect
Jeff Kim, an analyst at KB Securities, emphasized that current market prices for both companies fail to capture their earnings trajectories. Using Wednesday’s closing prices as a baseline, Samsung Electronics is valued at just 3.7 times its projected 2027 price-to-earnings ratio, while SK Hynix trades at an even lower 3.2x multiple.
Wall Street projections anticipate Samsung’s 2027 operating profit will reach 575 trillion won, with SK Hynix expected to generate 389 trillion won. These forecasts represent multipliers of 13.2x and 8.2x compared to their respective 2025 baseline figures.
According to Kim, the substantial disconnect between anticipated profit expansion and present-day valuations creates opportunities for multiple expansion. He also noted that forthcoming shareholder return initiatives at both corporations could provide additional catalysts for stock appreciation.
Samsung’s planned shareholder distributions over the coming three years are anticipated to exceed 600 trillion won, translating to a dividend yield surpassing 7%.
Immediate-term financial performance also appears promising. Samsung is forecast to deliver third-quarter 2026 operating profit of 112 trillion won, representing year-over-year growth of 817%. SK Hynix is projected to report 77 trillion won, marking a 579% annual increase.
Both manufacturers have locked in more than 60% of their production capacity through multi-year supply agreements with cloud computing giants, capitalizing on strengthening memory chip pricing.
Remaining Headwinds
Notwithstanding the recent surge, market observers maintain a measured outlook. The Kospi remains approximately 24% beneath its late June peak.
International institutional investors have extracted more than $100 billion from Korean equities throughout 2025. Some global funds have begun rotating back in, attracted by compressed valuations.
Wednesday’s softer-than-expected US inflation data also boosted market confidence by diminishing concerns about additional Federal Reserve interest rate increases.
South Korea’s stock market maintains heavy concentration in chip-related companies. Market strategists caution this composition leaves the index exposed to potential reversals in AI capital expenditure trends.
Regulatory authorities have implemented measures to prevent forced liquidations, including restrictions on single-stock leveraged exchange-traded funds and stricter margin lending standards.
Market analysts advise that investors should temper expectations for sustained upside momentum at the current velocity.
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