SK Hynix, Samsung shares gain as report says Temasek to invest
Both firms saw a brutal sell-off in July as doubts grew over the pace of rapid AI infrastructure buildout
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SOUTH Korean chipmakers rallied as risk appetite returned after last month’s rout and traders weighed a local media report that Singapore’s Temasek Holdings plans to invest in Samsung Electronics and SK Hynix.
Shares of the chip duo briefly extended gains to more than 8 per cent after Asia Business Daily reported that the state fund plans to invest directly in the two chipmakers through its internal investment team, and is mulling timing.
Samsung ended the day on Wednesday (Aug 12) up 6.7 per cent while SK Hynix rose 5.5 per cent. The benchmark Kospi gained 3.7 per cent.
Temasek said in response to queries from Bloomberg News that it did not seek advice from the Korean government on the timing of investments in either SK Hynix or Samsung, and that it first invested in both companies more than two years ago.
The chipmakers saw a brutal sell-off in July as doubts grew over the pace of rapid AI infrastructure buildout, leading to an unwinding of leveraged positions. The shares have been rebounding recently, amid growing expectations the companies will bolster shareholder returns with buybacks and more dividends.
“It is a positive confidence signal, but I would not see it as a game changer or the main driver of the Kospi rebound,” said Albert Yong, managing partner at hedge fund Petra Capital Management, referring to the local report. “Samsung and SK Hynix had become technically oversold despite still-strong fundamentals.”
SK Hynix said on Aug 7 that it will unveil shareholder-return details in the third quarter. Samsung Electronics is expected to follow suit, with KB Securities analysts expecting a more than tenfold increase in shareholder returns.
The valuations of the memory chipmakers have come down to record low levels following the July rout, when both stocks plunged more than 20 per cent. Samsung and SK Hynix are trading at 4.2 and 3.6 times forward earnings, respectively, compared with more than 21 times for the Philadelphia Semiconductor Index of global chip peers.
Global funds added nearly US$2 billion worth of Kospi shares on Wednesday, while retail traders sold.
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If confirmed, the investment would signal “strong foreign confidence in Korea’s AI/memory cycle”, said Ha Seok-keun, the chief investment officer at Eugene Asset Management. It would be one of the drivers supporting a Kospi rebound, he added. BLOOMBERG
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