[R&E] Memory Prices Surge 49%, KOSPI Settles into the 5,000p Era… IT Hardware-Led Market Strengthens

[R&E: Research & Epoch]
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Market Overview: Key Indicators and Trends

The U.S. stock market closed higher the previous day, with both the DOW and NASDAQ rising on the back of strong buying centered on tech stocks. In particular, the third-quarter GDP growth rate announced by the U.S. Department of Commerce recorded 4.4%, reaffirming a solid economic trend, which acted as a driving force for the rise in the New York stock market. In addition, as former President Trump lifted tariffs related to Greenland (TACO trade), alleviating geopolitical tensions, the volatility indicator VIX plummeted -15.9% compared to the previous day, showing a significant improvement in risk appetite.

The domestic stock market on the previous trading day also reflected this global tailwind, with the KOSPI surpassing 5,000p for the first time in history during intraday trading, but later closing at 4,952.53pt as profit-taking volume emerged. It is noteworthy that during the process of the KOSPI reaching 5,000p, the contribution of the earnings per share (EPS) upward revision (66.5%) was higher than the contribution of the price-to-earnings ratio (PER) increase (38.2%), leading to diagnoses that the valuation burden is limited. The large-cap stock Samsung Electronics led the index's rise as its market capitalization, including preferred shares, surpassed 1,000 trillion won.

However, the fourth-quarter GDP growth rate announced by the Bank of Korea recorded negative growth of -0.3% compared to the previous quarter, significantly falling short of the market expectation (0.1%), which is attributed to sluggish consumption, investment, and exports. Despite the confirmation of a delayed domestic demand recovery, it is judged that the market is focusing on the fact that the downward revision of the annual growth forecast for 2026 is limited rather than the short-term negative growth, continuing a market trend centered on IT and growth stocks.

Key Industry Issues and Insights

The core driver of today's market can be found in the supply-side price increases in the IT hardware and materials sectors. As expectations for a cyclical rebound in the memory semiconductor market have materialized, the 1-month spot price of DDR4 surged a whopping 49.63%, and NAND prices also rose by 8.27%. This price rebound serves as a basis to support the positive forecast that the memory market's annual revenue will exceed 1,000 trillion won in 2026. At the same time, moves to pass on selling prices are confirmed across the overall IT supply chain, such as Taiwanese passive component makers announcing price hikes of up to 20% starting in February. The booming semiconductor industry directly translates into upward revisions of earnings forecasts for leading domestic companies, with Samsung Electronics' operating profit forecast for 2026 being revised up to 170 trillion won.

Meanwhile, structural changes are also detected in the energy and materials sectors. As concerns about a cold wave in the Northern Hemisphere intensify, U.S. natural gas prices have skyrocketed by +62.1% on a weekly basis, and Asian LNG spot prices have also risen by 18.1%, raising expectations for short-term earnings improvements in the energy utility sector. In particular, amidst the realization of nuclear power policies, the change in the unit cost of the light water reactor spent nuclear fuel management levy, which is increased by 92.5%, signifies the realization of post-processing costs for utility companies. This, coupled with public opinion in favor of promoting new nuclear power plants under the long-term electricity supply and demand plan (11th Basic Plan for Electricity) (positive responses exceeding 60%), is expected to act as a revaluation factor for the overall sector. In the materials sector, due to PVC restructuring from China and strong exports, the price of chlorine, a co-product, has surged nearly three times compared to late December, which acts as a major variable increasing the visibility of earnings improvements for Chinese subsidiaries of related companies such as UNID.

Market Signals

• Surge in Memory Prices: The 1-month spot price of DDR4 surged +49.63% compared to the previous month, numerically proving a strong turnaround in the memory semiconductor industry.

• Negative Economic Growth Rate: South Korea's fourth-quarter GDP growth rate recorded -0.3% compared to the previous quarter, significantly below the market expectation (0.1%), confirming the delay in domestic demand recovery.

• Cloud/AI Infrastructure Expansion: Samsung SDS's fourth-quarter cloud revenue grew by +14.7% year-on-year, increasing the likelihood of linking the rising demand for AI clouds (GPUaaS) to the earnings of domestic IT service companies.

Epoch View: Investment Implications

As we enter the KOSPI 5,000p era, discussions on the market's valuation burden are expanding. On the previous trading day, the auto and auto parts sectors showed weakness in the domestic stock market, and Hyundai Motor's 12-month forward P/E entered a historical high range, exceeding both the KOSPI average (10.5x) and its competitor Toyota (11.5x). Accordingly, it is judged that pace control is necessary for the auto sector in the short term.

The current market leadership clearly lies with IT hardware based on AI and the recovery of the memory cycle. The steep upward trend in DDR4 prices and the upward revision of Samsung Electronics' target price provide confidence in the industry's recovery, and the solid flow of large-cap semiconductor stocks such as SK hynix is expected to continue. Also, just as Teledyne recorded its highest-ever quarterly orders in the U.S. stock market, domestic companies possessing technology related to advanced automation and military unmanned systems are highly likely to ride the upward trend accompanied by the spread of the robotics theme and increasing demand related to secondary batteries.

While the banking and insurance sectors, which remain in undervalued territory, continue to be undervalued at a PBR level of 0.63x, expectations for strengthening shareholder return policies, such as the reform of separate taxation on dividend income, are underlying. Despite the sluggish short-term economic indicator (GDP -0.3%), the market's focus should be concentrated on structurally growing sectors (IT, AI, Utilities) and sectors where value-up momentum remains, and a strategy of expanding exposure centered on sectors with high earnings visibility during every correction is effective.

This content was generated through News Epoch's proprietary AI algorithm, which tracks and analyzes public data from major domestic securities firms' research centers in real-time. It is an objective summary based on collected data, and it is clarified that it is not an investment solicitation or recommendation for specific stocks.