A display board at Hana Bank's headquarters in Jung-gu, Seoul, shows the Kospi and share prices of SK hynix and Samsung Electronics on Thursday. [Yonhap]
A display board at Hana Bank's headquarters in Jung-gu, Seoul, shows the Kospi and share prices of SK hynix and Samsung Electronics on Thursday. [Yonhap]

Large-cap semiconductor stocks surged Thursday after SK hynix announced a 40 trillion won ($28.5 billion) share buyback and cancellation program, pushing the Kospi up nearly 5% in early trading. With a spike in long-term US Treasury yields showing signs of easing, SK hynix's sweeping shareholder return plan also stoked expectations that Samsung Electronics could follow suit, further lifting the index. The rally was steep enough to trigger a buy-side sidecar on the main bourse.

The Kospi was trading at 6,792.31 as of 10 a.m. Thursday, up 321.14 points, or 4.96%, from the previous session, according to Korea Exchange. The index opened 209.17 points, or 3.23%, higher at 6,680.34 and continued to extend its gains.

Korea Exchange said it temporarily suspended program buy orders at 9:57 a.m. after KOSPI 200 futures rose 51.90 points, or 5.10%, above the base price to reach 1,068.15.

On the main board, foreign investors and institutional investors were net buyers of 111.7 billion won and 11.1 billion won, respectively, while retail investors were net sellers of 315.5 billion won.

Large-cap semiconductor stocks led the advance. Samsung Electronics was trading up 18,000 won, or 7.27%, at 265,500 won, while SK hynix gained 171,000 won, or 11.40%, to 1.671 million won.

The moves reflect improved investor sentiment following SK hynix's announcement of a major shareholder return package. The company's board met Wednesday and decided to buy back 24.07 million common shares on the open market and cancel all of them. The total acquisition amount is set at 40 trillion won. SK hynix also said it would raise its shareholder return ratio based on cumulative free cash flow from "within 50%" to "50% or more."

Han Ji-young, a researcher at Kiwoom Securities, said the buyback and cancellation would likely produce two positive effects: an improvement in earnings per share as the number of shares in circulation decreases, and a rise in return on equity as total equity shrinks. "These effects should help put a floor under the share price," Han said. SK hynix's move has also heightened expectations that Samsung Electronics will expand its own shareholder returns. Samsung Electronics has said it will allocate 50% of this year's free cash flow to shareholder returns.

Overnight gains on Wall Street and a stabilization in long-term Treasury yields also supported domestic markets. The Dow Jones Industrial Average closed up 119.65 points, or 0.22%, at 53,463.05. The S&P 500 rose 16.22 points, or 0.21%, to 7,707.98, and the NASDAQ gained 41.38 points, or 0.16%, to close at 26,331.09. The US 10-year Treasury yield stood at 4.64% and the 30-year yield at 5.18%.

Most large-cap stocks by market capitalization were also in positive territory. Samsung Electronics preferred shares rose 7.28%, SK Square gained 7.77%, Samsung Electro-Mechanics added 1.37%, Hyundai Motor climbed 0.60%, LG Energy Solution rose 1.26%, Samsung Biologics gained 0.78%, and Samsung C&T advanced 4.47%. Hanwha Aerospace fell 1.19%.

The Kosdaq was trading up 15.99 points, or 1.94%, at 840.45 at the same time, after opening 19.53 points, or 2.37%, higher at 843.99.

On the Kosdaq, institutional and retail investors were net buyers of 28 billion won and 85.2 billion won, respectively, while foreign investors were net sellers of 117.8 billion won.

Among top Kosdaq stocks by market capitalization, Alteogen rose 9.39%, Ecopro gained 2.67%, Ecopro BM added 3.10%, Rainbow Robotics climbed 1.41%, Jusung Engineering rose 2.51%, and Wonik IPS gained 1.37%. HLB fell 4.04% and EO Technics declined 1.08%.

Han said a combination of factors was coming together: shareholder return momentum from leading stocks, a cooling of the surge in long-term US yields, and an easing of the global concentration in semiconductor plays. "Both the Kospi and Kosdaq, which suffered sharp declines throughout this week, should be treated as a base scenario where price recovery resilience is improving," Han said.


hajun825@heraldcorp.com