[R&E] KOSPI Plunges 4.46% and KOSDAQ Breaks Below 750, Exceptions Include Samchundang Pharm's Upper Limit and Daeduck Electronics' Upward Earnings Forecast

[R&E: Research & Epoch] This is News Epoch's signature report that provides a perspective on a new era of investment by integrating and analyzing global financial data and domestic securities firm research.

Global Market Brief

The New York stock market continued its downward trend the previous day amid selling pressure for profit-taking centered on large-cap tech stocks and mixed macro indicators. The Dow Jones Industrial Average fell -0.59% from the previous trading day to record 51,839.26 points, and the S&P 500 index and the Nasdaq index also dropped -0.19% and -0.05%, respectively. On the other hand, the Philadelphia Semiconductor Index, which represents the sentiment of the semiconductor industry, closed at 11,743.85 points, up slightly by +0.60% from the previous trading day, showing a technical rebound following the recent sharp decline. This was influenced by the influx of bargain hunting into memory stocks such as Micron (+1.9%) and SanDisk (+2.7%). In the foreign exchange market, the US dollar index showed strength.

Geopolitical risks exerted direct upward pressure on oil prices. As US military casualties occurred in the Middle East and US retaliatory strikes continued, West Texas Intermediate (WTI) crude oil closed at $83.23 per barrel, up +0.90% from the previous trading day, and Brent crude closed at $89.22, up +1.27%. In addition, Houthi rebels declared a naval blockade against Saudi Arabia, adding to concerns over prolonged logistics disruptions. This acts as a factor that aggravates the cost burden on global manufacturing.

Domestic Market Overview

The domestic stock market fell the previous day as the sharp decline in semiconductor stocks and the re-proliferation of Middle East geopolitical risks overlapped. The KOSPI closed at 6,516.27 points, down -4.46% from the previous trading day, and the KOSDAQ also recorded 749.64 points, down -5.33%. A sell sidecar was triggered in both markets, and the KOSPI fell below the 120-day moving average for the first time in 15 months. In terms of supply and demand, foreigners turned to net buying in just one day, focusing on the electrical and electronics sectors, but the buying intensity was weak, while institutions turned to net selling after initial net buying in the early session. Although the scale of institutional net selling itself was not large, risk aversion sentiment acted strongly, bringing the number of declining KOSPI stocks to 799. The fact that the US semiconductor index fell 5.8% during the Korean holiday period, coupled with the spread of doubts about Big Tech capital expenditures following the unveiling of Chinese Moonshot AI's new model, acted as unfavorable factors.

In the foreign exchange market, the dollar-won exchange rate closed at 1,475.5 won, down 12.2 won from the previous trading day, significantly reversing its upward trend. The 1-month offshore Non-Deliverable Forward (NDF) also recorded a level of 1,475.0 won (-12.3 won). This is the result of expanded upward pressure on the won as foreigners' net buying of KOSPI, SK Hynix's dollar selling volume, and export companies' dollar-selling volume overlapped. However, the fact that the Bank of Korea's Monetary Policy Board shifted to a tightening stance by raising the benchmark interest rate by 25 basis points from 2.50% to 2.75% on the 16th remains a factor that contracts market liquidity. Looking ahead to today's opening, the key point for the domestic stock market is whether perceived oversold buying will flow in, reflecting the rebound in US semiconductor stocks and the alleviation of exchange rate burdens.

Key Industry Issues and Insights

Refining and Petrochemicals: Refiners' Profit Growth Phase Driven by Continued Strong Refining Margins

Supply chain disruptions caused by geopolitical conflicts are pushing refiners' margins beyond the normal range. The Singapore complex refining margin recorded $25.7 per barrel in the 3rd week of July and maintained a level of $24.24 as of July 20. This figure is still more than five times higher than the historical average ($6.0) and the refining industry's breakeven point of $4.5 per barrel. The background is that the Asian diesel margin rose 27% weekly to $66.7 per barrel in the aftermath of the suspension of Russian refining facilities.

Accordingly, refinery stocks showed differentiated trends in a bear market. S-Oil (KOSPI: 010950) closed +1.2% higher the previous day. The Q2 operating profits of S-Oil and SK Innovation (KOSPI: 096770) are analyzed to exceed market consensus by 13% and 21%, respectively. In the chemical sector, the price upward trend of basic fraction product lines such as benzene (+5.53%) and xylene (+5.05%) is also distinct. The fact that the number of inventory days for spandex in China decreased from the low 50s to 38 days and the utilization rate rose to the mid-80% range connects to Hyosung TNC's (KOSPI: 298020) capacity to raise selling prices.

Semiconductors and IT Components: Continued Upward Revision of Earnings Forecasts for the Materials, Parts, and Equipment Value Chain

Large-cap semiconductor stocks Samsung Electronics (KOSPI: 005930) and SK Hynix (KOSPI: 000660) underwent a correction the previous day, unable to overcome the downward pressure of the index, but the fundamentals of backend materials, parts, and equipment companies remain robust. Samsung Electro-Mechanics (KOSPI: 009150) showed a differentiated trend by rising +4.0% the previous day. This is due to securing an additional 450 billion won order for Multi-Layer Ceramic Capacitors (MLCCs) for AI servers, following the existing 1.55 trillion won order for Silicon Capacitors (Si-Caps), and solidifying its long-term dominance with facility investments of 8 trillion won in Sejong and 15 trillion won in Busan.

Semiconductor package substrate maker Daeduck Electronics (KOSPI: 353200) is forecasted to record Q2 sales of 390.6 billion won (+58.7% YoY) and an operating profit of 66.6 billion won (+3,468.0% YoY). This is a 7.3% upward revision from the previous operating profit estimate, exceeding the market consensus (62.9 billion won) by 5.8%. A favorable exchange rate effect, along with the fact that the utilization rate of semiconductor packaging substrates (FC-BGA) recovered to 80% as of the end of the second quarter, was reflected. Probe card material maker for inspection SEMCNS (KOSDAQ: 252990) is also expected to exceed consensus by 6.6% with a Q2 operating profit of 8.6 billion won (+150.3% YoY), supporting the sustainability of semiconductor hardware infrastructure investments.

Pharmaceuticals and Biotech: Divergent Stock Performances Based on Individual Events

The pharmaceutical and biotech sectors showed distinctly divergent stock performances depending on the progress of individual companies' pipelines and capital policies. Samchundang Pharm (KOSDAQ: 000250) displayed an unparalleled trend by hitting the upper limit (+29.8%) the previous day on the news of receiving an official response from the US Food and Drug Administration (FDA) regarding the development of a semaglutide generic. On the other hand, Alteogen (KOSDAQ: 196170) temporarily suspended its push to transfer its listing to the KOSPI and decided on a 0.3 shares per share (30%) bonus issue for shareholder return, but closed marginally lower at -0.7% the previous day. LigaChem Biosciences (KOSDAQ: 141080) dropped -6.36% on news that the conversion price of its convertible preferred stocks and convertible bonds was adjusted downward from 149,300 won to 121,400 won, increasing the number of potential shares by 770,000 shares.

Meanwhile, Samsung Biologics (KOSPI: 207940) signed an agreement to acquire the Swiss PolyPeptide Group for approximately 2.7 trillion won to strengthen its global peptide Contract Development and Manufacturing Organization (CDMO) capabilities, aiming to secure a 100% stake by the end of the year. This is a measure to respond to the surging demand for GLP-1 obesity treatments from global pharmaceutical companies. However, the possibility of profitability dilution on a consolidated basis is pointed out as a burdening factor, as PolyPeptide's operating profit margin is around 2%, significantly lower than that of Samsung Biologics (45%). Full-scale reflection in consolidated earnings will begin in 2027.

Hyundai Motor Group and Robotics: Governance Restructuring and Smart Factory Vertical Integration

Hyundai Motor (KOSPI: 005380) experienced a downward correction the previous day, but investments in robotics, the group's mid-to-long-term new growth engine, are picking up speed. Hyundai Motor Group Executive Chair Euisun Chung invested an additional 120 billion won ($80 million) of his personal funds to expand his stake in Boston Dynamics to 25.0%. Chung's cumulative personal investment amounts to 800 billion won. The 9.65% stake (approximately 486.7 billion won) for which SoftBank exercised its put option will be acquired proportionally by shareholders: HMG Global with 62.5%, Chair Chung with 25%, and Hyundai Glovis (KOSPI: 086280) with 12.5%, streamlining the group-level governance structure. Starting with this stake adjustment, the humanoid robot 'Atlas' will be deployed to Hyundai Motor's new plant in Georgia, US (HMGMA) in 2028 to handle parts sequencing tasks, and will expand to the parts assembly process in 2030. This suggests the entry into the execution phase of a smart factory vertical integration strategy aimed at reducing production costs and intellectualizing manufacturing.

Market Signals

• Samchundang Pharm Hits Upper Limit on Receipt of FDA Official Letter: Samchundang Pharm surged +29.8% to hit the upper limit the previous day on news of receiving an official response from the FDA regarding the development of a semaglutide generic.

• Daeduck Electronics Upgrades Q2 Earnings Forecast: Daeduck Electronics' Q2 operating profit estimate was revised upward by 7.3% to 66.6 billion won compared to the previous estimate. This is due to the FC-BGA utilization rate recovering to 80% by the end of the second quarter.

• Won/Dollar Exchange Rate Drops 12.2 Won: The dollar-won exchange rate closed at 1,475.5 won, down 12.2 won from the previous trading day. Foreign net buying and SK Hynix's dollar selling volume drove the won's strength.

• Executive Chair Euisun Chung Expands Stake in Boston Dynamics: Executive Chair Euisun Chung invested approximately 120 billion won of his personal funds to increase his stake in Boston Dynamics to 25.0%, strengthening the internalization strategy for the robotics business.

Epoch View: Investment Implications

The domestic stock market's trend the previous day, where the KOSPI surrendered its 120-day moving average for the first time in 15 months alongside the triggering of a sell sidecar, is analyzed as an oversold phase created by concerns over macro tightening and the synchronization of the global semiconductor sector. However, unlike the index's decline, earnings estimates for IT components and semiconductor materials, parts, and equipment value chains such as Samsung Electro-Mechanics, Daeduck Electronics, and SEMCNS are actually being revised upward, and refining margins are also maintaining levels that exceed the breakeven point by five times. It is also a time when global investment banks diagnose a historically undervalued phase as the KOSPI's 12-month forward price-to-earnings ratio (PER) has fallen to 5.8 times. Nevertheless, as seen in Samsung Biologics' acquisition case, external expansion does not immediately translate into profitability. Rather than blindly participating in supply and demand distortions caused by macro shocks, it is effective to adopt a strategy of selectively approaching companies where earnings estimates are actually being revised upward and downstream orders are confirmed.

This content was generated through News Epoch's proprietary AI algorithm, which tracks and analyzes public data from domestic major securities firm research centers and global financial media in real time. We disclose that this is an objective summary based on collected data and does not constitute a solicitation or recommendation for investment in any specific stock.