The South Korean stock market rebounded after two days of intense volatility, but several factors driving the market down did not disappear. On Tuesday, the Korean composite equity index KOSPI suffered a single-day collapse and triggered a smelting, with a quick upturn on the Wednesday disk, indicating that funds are still playing over and over again around semiconductor weights, policy signals and leverage.
Weight weights drag up and down.
Tuesday's sales were concentrated in Samsung Electronics and SK Hercules, which at one time had a double-share of over 12 per cent, with a significant drag on the index. Because of the high weight of the two equities in KOSPI, the decline was rapidly magnified to the entire market and spilled to the global semiconductor plate.
On Wednesday morning, KOSPI continued to look down and then went up. The three-star electrodisk is rising from a fall, and the SK Hercules is back from the low of the early plate, leading to the V-type restoration. The market generally saw the rebound as a rehabilitation after the collapse and was boosted by the Samsung buyback.
Samsung buys back rumors that support short-line emotions.
According to media sources citing industry sources, Samsung Electronics plans to buy back 90 trillion won of shares to pay special performance bonuses for employees. This arrangement is said to relate to the agreement between the company and the trade union that the bonus will be given in the form of shares rather than cash.
Once the information was repurchased, there was a huge increase in the three-star electronic disk, which was the most direct supporting factor of the day. However, the market also noted that this buy-back and non-traditional shareholder return arrangements were linked to staff incentives and that the impact on long-term valuations remained to be seen.
Increased signal and MSCI results pressure
The Central Bank of Korea stated in its Financial Stability Report on 24 June that, given inflation, economic dynamics and the risk of financial stability, it would be necessary to raise the benchmark interest rate at the right time. At the same time, the report refers to asset leverage, the recovery in housing prices and the decline in the solvency of some vulnerable sectors as sources of current risk.
In addition, the statement by the head of the Korean President's policy that semiconductor enterprises should “share AI proceeds” also suppresses chip unit performance. Investors are concerned that the valuation of the semiconductor plate may be expected to continue if the policy discussion further extends to profit distribution or tax arrangements.
The latest MSCI assessment continues to list Korea as an emerging market and does not include it on the watch list of developed markets. MSCI indicated that issues such as off-shore convertibility of the Korean Won, the investor identification system and restrictions on off-site transactions remained to be improved. This means that in the short term the Korean market will find it difficult to obtain the expected support of foreign investment from the upgrading of developed markets.