Samsung Electronics and SK Hynix’s market capitalization shrinks by nearly 120 trillion won over last month

Samsung Electronics’s headquarters in Seocho, Seoul, is seen on September 22. Reporter Kwon Do-hyun

The market capitalization of Samsung Electronics and SK Hynix has plummeted by nearly 120 trillion won over the last month. As the stock prices of the two companies, which rank first and second in market capitalization, have fallen due to concerns over worsening semiconductor business conditions, it is difficult to find a stock market that is weaker than the KOSPI market among major global countries except China and Russia.

According to the Korea Exchange on September 22, Samsung Electronics' market capitalization, which was 467.43 trillion won on August 21, fell 91.33 trillion won to 376.96 trillion won on September 20. During the same period, that of SK Hynix decreased by 25.84 trillion won from 140.21 trillion won to 114.37 trillion won. Combined, the scale of reduction amounted to 117.18 trillion won. The stock prices of the two companies plunged 20.15 percent and 21.33 percent respectively in a month.

As demand for general DRAMs, which still account for the majority of sales due to sluggish PC and smartphone industries, has not recovered as expected, foreigners' net sales this month amounted to 5.90 trillion won for Samsung Electronics and 837 billion won for SK Hynix. In isolation from foreign securities firm Morgan Stanley’s recent report suggesting a "half-cut" target stock price for SK Hynix, which led to a big drop in the Korean companies’ market capitalization, the market is already looking darkly at the prospects for semiconductor companies.

The benchmark KOSPI share price index is also being affected as stock prices of the two companies, which account for more than 23 percent of the KOSPI's market capitalization, falter. The KOSPI fell 3.03 percent this month, compared with major global stock markets, such as Europe (-1.74 percent), Japan (-2.39 percent), and Taiwan (-0.49 percent). Even if the time series is expanded, the KOSPI yield has not deviated from the bottom of the world.

Although most stock markets had positive returns this year, the KOSPI fell 2.33 percent from the beginning of the year. Among the top 20 countries in nominal GDP, Mexico, China and warring Russia are the only countries with weaker stock market yields than Korea this year.

Among major Asian countries, the KOSPI showed poor performance, compared with Taiwan’s TAIEX, which showed a 22.93 percent rise, and Japan`s Nikkei 225 index, which showed a 12.78 percent rise.

The outlook for the KOSPI is not optimistic, although the yen's strength has subsided last week with the Bank of Japan hinting at a pace of rate hikes and the U.S. Federal Reserve's rate cut slightly restoring the preference for risky assets. This is because, in the mid- to long-term, there is an expectation that the performance will improve due to a decrease in DRAM supply by turning general DRAM production lines to high-bandwidth memory (HBM) production lines used for artificial intelligence (AI), but in the short term, it is difficult to expect Samsung Electronics and SK Hynix to improve their performance. The performance of U.S. memory semiconductor company Micron Technology, which will be announced on September 26, is expected to be a variable that will influence the KOSPI.

※This article has undergone review by a professional translator after being translated by an AI translation tool.