[R&E] KOSPI Rises 0.74% on Foreign Net Purchases of 2.6 Trillion Won, Driven by SK Hynix's 7 Trillion Won Investment and Strong Semiconductor Exports

[R&E: Research & Epoch] This is News Epoch's signature report that envisions a new era of investment through an integrated analysis of global financial data and domestic securities firms' research.

Global Market Brief

The New York stock market closed mixed the previous day as concerns over prolonged high interest rates coincided with caution ahead of tech earnings. The S&P 500 index fell -0.14% from the previous trading day to 7,498.96 points, and the tech-heavy NASDAQ Composite also slipped -0.57% to close at 25,690.90 points. On the other hand, the Dow Jones Industrial Average held up relatively well, ending slightly lower at 52,218.58 points (-0.01%), while the Philadelphia Semiconductor Index closed slightly higher at 12,410.67 points (+0.44%).

Surging international oil prices and geopolitical instability stimulated U.S. Treasury yields. West Texas Intermediate (WTI) crude oil rose 2.95% from the previous trading day to $86.83 per barrel, and Brent crude climbed 3.36% to $94.07 per barrel, amplifying concerns about energy inflation. Consequently, the yield on the U.S. 10-year Treasury note rose to 4.6545% (+2.6bp), and the 2-year yield also increased to 4.2978% (+3.6bp). The 30-year yield maintained a level above the 5% mark at 5.14%.

Market reactions to Big Tech earnings were mixed. Alphabet exceeded market expectations with Q2 revenue of $119.8 billion and earnings per share (EPS) of $9.11, notably recording a surprise in cloud revenue at $24.7 billion (+82% YoY). However, its stock fell in after-hours trading as the company further raised its annual capital expenditure (CapEx) guidance and foreshadowed a significant increase next year, leading to concerns over negative free cash flow (FCF) and potential reliance on debt. Conversely, Super Micro Computer unveiled a record backlog of $60 billion and margin improvements, surging +19.84% and supporting the downside of the IT sector. This proves that corporate capital expenditures for building artificial intelligence (AI) infrastructure continue unabated despite a high interest rate environment.

Domestic Market Overview

The domestic financial market recorded a differentiated trend the previous day, bolstered by overwhelming semiconductor-led export growth despite global macroeconomic uncertainties. The KOSPI closed at 6,797.70 points, up +0.74% from the previous trading day. Although a buy sidecar was triggered intraday, momentarily reclaiming the 7,000 mark, the index gave back some gains in the afternoon due to profit-taking. Meanwhile, the KOSDAQ closed at 751.09 points, down -0.30% from the previous trading day, as profit-taking emerged in the pharmaceutical and bio sectors. Foreign investors net purchased 2.6 trillion won in spot shares on the KOSPI market. This was the largest daily volume since May 6, with 1.7 trillion won flowing into semiconductors alone, leading the index's rise.

Behind this strong supply and demand dynamic lies export fundamentals. From July 1 to 20, domestic exports stood at $54.9 billion, a +52.3% increase year-on-year, marking the highest-ever performance for July. Notably, semiconductor exports, which account for 40.3% of total exports, surged +180.6% year-on-year to $22.1 billion, proving robust earnings capacity.

In the foreign exchange market, the won-dollar exchange rate closed at 1,477.8 won, down 3.9 won from the previous day, reflecting a stronger won. However, in the bond market, domestic government bond yields rose in tandem with U.S. Treasury yields, acting as a rate stimulant. This suggests that despite concerns over a slowdown in the domestic economy, earnings growth centered on large-cap export stocks driven by the global semiconductor cycle is acting as a core support line for the domestic stock market.

Key Sector Issues and Insights

Semiconductor and Display: Renewed Acceleration in Capital Expenditures by Domestic Conglomerates Amid Solid Export Base

The firmness of the semiconductor industry is evidenced by item-specific export indicators and proactive capital expenditures by major conglomerates. By July 20, DRAM export value had surged +453.5% year-on-year to $8,773.51 million, and DRAM module exports also recorded $3,099.62 million (+241.3% YoY). In response to this expanding downstream demand, SK Hynix (KOSPI: 000660) moved up its investment timeline by re-resolving a new packaging facility investment worth 7 trillion won at its Cheongju P&T7 plant. Samsung Electronics (KOSPI: 005930) also embarked on diversifying its high-value-added portfolio by becoming the world's first to apply a PIM (Processing-in-Memory) solution that combines computing functions with low-power memory. The previous day, Samsung Electronics digested intraday profit-taking to close up +0.58%, while SK Hynix underwent a mild correction, dropping -0.33%.

Accompanied growth and investments by upstream supply chain companies are also robust. Semiconductor package substrate manufacturer Daeduck Electronics (KOSPI: 353200) announced a new investment of 497 billion won to strengthen its high-value-added product portfolio. In the display sector, LG Display (KOSPI: 034220) successfully turned a profit in the first half of the year, proving its structural improvement, despite recognizing approximately 240 billion won in workforce efficiency costs during the second quarter. For key component supplier Hana Materials (KOSDAQ: 166090), target prices were upgraded amid securities firms' forecasts viewing 2026 as the inaugural year of earnings growth, based on rising demand for core components such as SiC rings driven by the semiconductor industry's recovery. This suggests that regardless of temporary interest rate stimulus factors, the IT component value chain has entered a phase of high earnings visibility.

Future Mobility and Energy Infrastructure: Intersection of Large Orders and Strategic Shareholder Returns Amid Strong North American Performance

Orders resulting from the expansion of artificial intelligence (AI) power infrastructure are translating into earnings for the power equipment value chain. Semiconductor and device equipment specialist Koses (KOSDAQ: 089890) disclosed that it has secured a 150 billion won order for solid oxide fuel cell (SOFC) automation equipment from Bloom Energy in the U.S. With this contract, Koses' cumulative order value has increased to 237.1 billion won (5GW). Accordingly, Koses' annual revenue for 2026 is estimated to reach 179.4 billion won (+117.8% YoY), with an operating profit of 39.3 billion won (+125.8% YoY).

In the mobility sector, Hyundai Motor (KOSPI: 005380) rose +4.76% the previous day. This was driven by an influx of buying interest as a related stock, following the emergence of a physical AI theme upon news of Samsung Electronics' robot business expansion. Concerns over production disruptions due to a partial union strike remain a persistent risk factor. Meanwhile, in the U.S. market, the price of the 2026 IONIQ 5 N was cut by $6,300, lowering its starting price to $61,500. This is interpreted as a measure to defend market share in the U.S. by increasing the accessibility of high-performance electric vehicles.

Pharmaceuticals/Bio and Consumer Goods: Securing New Listing Momentum and Differentiated Earnings Trends

The pharmaceutical and bio sector is proving its valuation justification based on technology transfer achievements and tangible profit indicators. Ingenia Therapeutics (IPO allocation code 952509), an eye disease new drug development company set to be listed on the KOSDAQ in mid-August 2026, is conducting demand forecasting with a target offering price band of 12,000 to 14,500 won (estimated market capitalization of 593.3 billion to 716.9 billion won). Its core pipeline, IGT-427, was licensed out to the global bio company EyeBio (acquired by MSD in 2024), and Merck is currently conducting four Phase 3 trials for ophthalmic indications. Kangstem Biotech (KOSDAQ: 217730), which is currently conducting Phase 2a clinical trials for an injectable osteoarthritis treatment, is garnering anticipation by forecasting a top-line data announcement in July.

The profit improvement prospects for already-listed companies also stand out. SK Biopharmaceuticals (KOSPI: 326030) is projected to achieve a Q2 operating profit of 88.5 billion won (+43.0% YoY) as prescription volumes of Xcopri in the U.S. increased by 8.5% from the previous quarter. Aesthetic medical device manufacturer Classys (KOSDAQ: 214150) is estimated to record a Q2 revenue of 107.6 billion won (+29.1% YoY) and an operating profit of 49.4 billion won (+14.8% YoY, operating margin of 45.9%), though the operating profit is expected to fall below consensus. Leading consumer goods stock KT&G (KOSPI: 033780) is forecast to meet market expectations with a Q2 operating profit of 400.4 billion won (+14.4% YoY, operating margin of 23.7%), bolstered by strong overseas sales of combustible cigarettes. Entertainment agency SM Entertainment (KOSDAQ: 041510) is also anticipated to slightly exceed consensus with a Q2 operating profit of 53.3 billion won (+11.9% YoY).

Market Signals

• Semiconductor Export Growth: From July 1 to 20, domestic semiconductor export value stood at $22.1 billion, a 180.6% increase year-on-year. This amount accounts for 40.3% of the total export value ($54.9 billion).

• Largest Daily Foreign Net Purchases: Foreign investors net purchased 2.6 trillion won on the KOSPI the previous day, including 1.7 trillion won in semiconductors, marking the largest daily volume since May 6.

• Rising Delinquency Rates in Domestic Commercial Banks: As of the end of May, the delinquency rate for won-denominated loans at domestic banks reached 0.67%, an increase of 6bp from the previous month and 3bp year-on-year. In particular, the delinquency rate for small and medium-sized enterprises (SMEs) reached 1.00%, the highest level since 2015.

Epoch View: Investment Implications

The global financial market is exposed to pressures of high interest rates and high oil prices, with the 10-year U.S. Treasury yield exceeding 4.65% and Brent crude soaring to the $94 per barrel level. This is a factor that aggravates valuation discount pressure across risk assets as a whole.

However, the fundamental defensive strength of the Korean market remains robust. As evidenced by the record-level export growth rate (+180.6%) in the semiconductor sector, its status as a core supply chain within the global tech chain has become even more solidified. In particular, SK Hynix's preemptive packaging investment of 7 trillion won and Daeduck Electronics' investment in high-value-added substrates demonstrate companies' resolve to widen the gap in a phase of technological advancement. The return of foreign net purchases to the largest scale since May is a supply-demand signal suggesting that a revaluation of these fundamentals has begun. Ultimately, amidst macroeconomic instability, market differentiation is determined by whether a company possesses undeniable earnings strength and the underlying capability to execute large-scale capital expenditures.

This content was generated by News Epoch's proprietary AI algorithm, which tracks and analyzes public data from major domestic securities firm research centers and global financial media in real-time. It is an objective summary based on collected data and does not constitute a solicitation or recommendation to invest in specific stocks.