Stocks end higher on chip gains amid hopes for shareholder return plans

Stocks in South Korea closed higher on Friday, driven by investor optimism over potential shareholder return initiatives from the nation’s leading chipmakers, Samsung Electronics and SK hynix. The Korea Composite Stock Price Index gained 0.88 percent, ending at 6,912.95, with the index reaching a peak of 6,954.12 during trading. The rally came despite ongoing concerns over global economic conditions and rising bond yields. Investors focused on the anticipated announcements from Samsung and SK hynix, both of which have been considering substantial measures to reward shareholders. SK hynix had already revealed plans to repurchase approximately 40 trillion won in common shares as part of its shareholder return strategy. Later in the trading session, Samsung Electronics was expected to unveil a similar initiative, potentially involving up to 110 trillion won. These developments fueled buying activity among investors seeking returns from the technology sector. Despite these positive factors, market gains were tempered by broader financial uncertainties. The U.S. Treasury Department’s unexpected bond-buying program did little to alleviate worries about inflation and growing federal debt, instead contributing to a rise in bond yields. This environment created pressure on investors to balance opportunities within the domestic market against international risks. Major tech firms saw notable increases, with Samsung Electronics climbing 3.87 percent to close at 281,500 won. Its competitor, SK hynix, also advanced, gaining 2.31 percent to reach 1,730,000 won. Financial institutions benefited from the trend as well, with KB Financial rising 2.69 percent to 164,300 won and Shinhan Financial Holdings increasing 2.97 percent to 104,100 won. Investors appeared to be taking advantage of perceived undervaluation in the banking sector. Conversely, certain sectors faced downward pressure. Defense-related companies and shipbuilders saw declines, partly due to profit-taking and reduced demand. Hanwha Aerospace dropped 7.03 percent to 1,085,000 won, while HD Hyundai Heavy Industries lost 4.73 percent to 453,000 won. Additionally, Kakao’s shares plummeted by 7.49 percent to 35,800 won following the company’s decision to spin off its chat-app-based platform business. Trading volume remained moderate, with 404.5 million shares changing hands valued at 28.7 trillion won ($20.7 billion). Retail and foreign investors collectively sold off 1.34 trillion won, whereas institutional investors purchased 248.2 billion won. Analysts noted that the improved sentiment was largely attributed to the shareholder return strategies of Samsung and SK hynix, which helped offset external pressures. The Korean won strengthened against the U.S. dollar, closing at 1,386.5 won per dollar, reflecting a 6.1 won increase compared to the previous session. This movement underscored the relative strength of the local currency amidst global economic volatility. As the week progresses, attention will likely shift toward the formal announcements from Samsung Electronics, which could provide further clarity on its shareholder return plans and impact future market dynamics.