[R&E] KOSPI Plummets 4% on Big Tech Shock; KB Financial Group Proposes 58% Shareholder Return Rate, Emerging as 'K-Value Up' Leading Sector

[R&E: Research & Epoch]

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Market Overview: Key Indicators and Trends

In the U.S. stock market the previous day, the tech stock sell-off intensified due to a combination of aggressive capital expenditure guidance from big tech companies and earnings disappointments from some firms. Amazon (NASDAQ: AMZN) presented a $200 billion capital expenditure guidance, and Alphabet (NASDAQ: GOOGL) also announced a significant expansion in investment, but this stimulated concerns over short-term profitability deterioration. Added to this was the disappointment in earnings from major semiconductor companies such as AMD (NASDAQ: AMD), causing the NASDAQ index to fall below its 100-day moving average for the first time since November of last year, while the S&P 500 and NASDAQ indices closed down 1.23% and 1.59%, respectively. Furthermore, as U.S. employment indicators sent clear signs of a slowdown—such as a 205% increase in Challenger job cuts and a sharp drop in JOLTS job openings—expectations for a rate cut within the year are growing again, escalating risk aversion.

On the previous trading day, the domestic stock market absorbed the shockwave from the New York stock market entirely, with foreign investors recording a massive net selling of over 5 trillion won in the KOSPI market. In particular, large-cap tech stocks, primarily semiconductors, fell sharply, leading the KOSPI and KOSDAQ indices to plummet by 3.86% and 3.57%, respectively, at the close. Analysts suggest that macro uncertainty and concerns over contracting downstream demand still dominate the market. However, a supply-and-demand sector rotation was observed, centering on individual stocks with strong earnings, such as the financial sector, which announced large-scale dividend hikes and share cancellation plans, and the biotech sector, which proved its core business competitiveness. Today's market is expected to see further differentiation among individual stocks based on corporate fundamentals and willingness to return shareholder value.

Industry-Specific Key Issues and Insights

The financial sector secured market leadership by announcing robust shareholder return policies in line with the government's 'K-Value Up' policy push. KB Financial Group (105560) announced a plan to inject 1.2 trillion won into share buybacks in the first half of next year, based on strong performance with a fourth-quarter net profit exceeding market expectations by 23%, and presented an estimated total shareholder return rate of 58% for 2026, expressing the highest level of commitment to returns in the industry. Shinhan Financial Group (055550) also achieved its 2025 total shareholder return rate target of 50% early, and continues active value-up efforts by revealing plans to increase its 2026 dividend by 14.3% and purchase 700 billion won in treasury shares. It is also noteworthy that they are pursuing a capital reduction dividend method to meet the requirements for separate taxation on dividends. With regional financial holding company JB Financial Group (175510) also raising its target shareholder return rate to 50%, analysts say the 'era of 50% shareholder returns' has begun across the entire financial sector.

Meanwhile, mixed signals are being detected in the IT and semiconductor sectors. Nitto Boseki (TYO: 3110), a high value-added materials company, proved structural growth as its operating profit surged by 23.2% year-on-year due to expanded sales of special glass materials for AI servers. This suggests that the value of a few key material companies essential for building advanced IT infrastructure could be continuously reassessed. On the other hand, Qualcomm (NASDAQ: QCOM) suffered disruptions in the production plans of Chinese smartphone manufacturers due to memory supply shortages, resulting in second-quarter guidance that significantly missed market expectations, indicating that supply chain constraints are still holding back earnings in downstream industries. As domestic IT equipment and materials company Duksan Hi-Metal (077360) has secured a 70% global market share in the micro solder ball market, a key component for FC-BGA, and is certain to see a 228% surge in operating profit in 2026, a selective approach to companies with specific technological capabilities is essential.

The pharmaceutical and biotech sector has entered a recovery phase with significantly improved profitability through the resolution of merger issues and the growth of high-margin new products. Celltrion (068270) saw its fourth-quarter consolidated operating profit surge 142.0% year-on-year, beating market expectations, and recorded an operating profit margin of 35.7%. The expansion in the proportion of new high-margin biosimilar products and revenue contribution from Zymfentra are the main drivers of profitability improvement. Hanmi Pharmaceutical (128940) also achieved record-high operating profit, increasing 173.4% year-on-year, attributed to strong sales of the high-margin product Rosuzet and the recognition of technology transfer upfront fees.

Market Signals

• Financial Holding Companies' Shareholder Returns: KB Financial Group (105560) presented a total shareholder return rate target of 58% for 2026, recording the highest level in the industry, and proved its strong determination to execute its value-up policy through a 1.2 trillion won share buyback and cancellation during the first half of the year.

• Growth of High Value-Added Materials: Japan's Nitto Boseki (TYO: 3110) renewed its all-time high performance as its fourth-quarter operating profit increased 23.2% year-on-year, driven by strong sales of high value-added glass materials used in AI servers and semiconductor substrates.

• Biotech Profitability Improvement: Celltrion (068270) achieved a fourth-quarter operating profit margin of 35.7% and recorded steep growth of 142.0% year-on-year, driven by an expanded revenue proportion of high-margin new products.

Epoch View: Investment Implications

The tech stock selling pressure originating from the U.S. stock market and the plunge in the domestic stock market show that uncertainties in the macro environment still persist. In particular, expectations of a rate cut following the slowdown in U.S. employment indicators are directly linked to concerns over an economic slowdown, acting as a factor that heightens market volatility. In the current market, focus should be on sectors showing clear earnings improvement and structural growth.

First, the financial holding sector, which has presented robust and measurable shareholder return plans, is a strong candidate to emerge as an alternative investment destination. These companies are actively enhancing corporate value through high dividends and large-scale share cancellations, meaning their value-up momentum is expected to be sustained in the long term. Second, a selective approach to IT materials and parts companies that have secured a monopolistic position amidst supply constraints related to AI and advanced infrastructure is effective. Lastly, the biotech sector, which has significantly improved profitability through the expansion of its high-margin new product portfolio, has high expectations for fundamental-based growth. Rather than being engrossed in short-term macro variables, a strategy is needed to shift the center of gravity of the portfolio to companies that secure earnings-based price attractiveness and actively implement shareholder-friendly policies.

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