[R&E] KOSPI Rises 1.62% Amid Strong Earnings from Yuhan Corporation and Daewoo E&C, Driven by U.S. Manufacturing Expansion

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

Global Market Brief

The U.S. New York stock market hit a record high, driven by expectations of interest rate cuts due to plunging international oil prices and slowing employment indicators, as well as robust corporate earnings. As of the previous close, the blue-chip Dow Jones Industrial Average rose 1.71% from the previous trading day to 54,085.88 points. The large-cap S&P 500 index climbed 1.79% to 7,736.52 points, rewriting its all-time high closing price. The tech-heavy Nasdaq Composite also closed 2.59% higher at 26,584.99 points. The previously announced U.S. ISM manufacturing index for July recorded 55.6, exceeding the market expectation of 54.0, which indicated a continuing trend of manufacturing expansion and further supported investor sentiment.

Signs of a cooling labor market stimulated expectations for interest rate cuts. The U.S. JOLTS job openings for June fell short of expectations at 7.359 million, marking a decline for two consecutive months. Consequently, the yield on the 10-year U.S. Treasury note was adjusted downward, dropping 6.3 basis points from the previous day to 4.6126%. International oil prices continued their weakness for a second consecutive day amid an easing of geopolitical tensions, including expectations of the Strait of Hormuz reopening, with West Texas Intermediate (WTI) crude futures closing at $75.77 per barrel, down 5.69% from the previous day. The moderate slowdown in inflation and the manufacturing expansion in the U.S. stock market acted as a driving force to stimulate the spread of risk-on sentiment toward emerging markets such as South Korea.

Domestic Market Overview

The domestic financial market staged a strong rebound, in sync with improving global macroeconomic indicators and the downward trend in U.S. Treasury yields. The KOSPI index closed at 6,358.95 points, up 1.62% from the previous trading day, recovering the 6,300 mark. Although foreign investors continued their selling trend during the session, the influx of rotational buying led the index's rise. In particular, the KOSDAQ index soared 5.88% from the previous day to close at 780.72 points. During regular trading hours, a buy sidecar, which temporarily suspends the validity of program buy orders, was triggered, marking the first instance of a buy sidecar being activated for three consecutive trading days since the opening of the KOSDAQ market.

In the Seoul foreign exchange market, the dollar-won exchange rate closed at 1,429.9 won, up 0.9 won from the previous day. The 1-month NDF exchange rate recorded 1,429.81 won, indicating a trend of won stabilization in the offshore market. In the domestic bond market, the yield on 3-year government bonds fell 0.2 basis points from the previous trading day to 3.740%, while the 10-year yield closed 0.4 basis points higher at 4.264%. The fact that South Korea's July headline Consumer Price Index (CPI) rose 2.8% year-on-year, falling below the market expectation (3.0%), also supported expectations of an easing in monetary tightening. Today's regular market is analyzed to show a differentiated flow centered on sectors with visible earnings turnarounds, absorbing the warmth of the semiconductor accelerator demand and biotech rally confirmed in the New York stock market the previous day.

Key Industry Issues and Insights

Semiconductors and IT Components: Supply Chain Revaluation Triggered by AMD Earnings and MLCC Price Hikes

Expectations for an increase in domestic semiconductor utilization rates are growing as the capacity for sustained artificial intelligence (AI) capital expenditures by global big tech companies has been confirmed. AMD beat market forecasts with 2026 second-quarter revenue of $11.54 billion and adjusted earnings per share (EPS) of $1.66. Among this, data center revenue more than doubled year-on-year to $6.72 billion, proving robust demand for AI infrastructure. However, AMD's after-hours stock price fell post-earnings as investment burdens and competition concerns were highlighted. Meanwhile, driven by expectations of further DRAM price hikes in the third quarter and news that sales volumes are virtually sold out through 2027, SK Hynix (KOSPI: 000660) ADRs in the U.S. market closed up 8.17% from the previous day. In the domestic regular market the previous day, SK Hynix also rose 0.6%, and Samsung Electronics (KOSPI: 005930) recovered from a 4.8% intraday drop to close slightly higher by 0.2%, securing the initiative for a rebound.

Meanwhile, in the second quarter of 2026, the global DRAM market share was 39% for Samsung Electronics and 26% for SK Hynix. The drop in SK Hynix's share from 39% in the second quarter of last year to 26% this year suggests a diversification of the landscape due to its focus on High Bandwidth Memory (HBM) and the entry of latecomers such as ChangXin Memory Technologies (which secured a 7% share). Moves to raise prices for IT components have also materialized. Samsung Electro-Mechanics (KOSPI: 009150) decided to raise the supply price of Multi-Layer Ceramic Capacitors (MLCC) by 30% starting in August. Its stock price rose 3.42% the previous day, revealing its ability to pass on prices amid a recovery in market demand. This implies that the tight supply-demand allocation of high-value-added multilayer substrates and MLCCs for high-end smartphones and AI servers will drive an improvement in profit margins that more than offsets the burden of raw material costs.

Construction and Green Energy: Improvement in Daewoo E&C's Housing Profitability and the Effect of the Confirmed Korean AMPC

Massive earnings surprises and the government's sudden introduction of tax benefits are driving a revaluation of the machinery and construction sectors. Daewoo E&C (KOSPI: 047040) recorded consolidated revenue of 2.0435 trillion won and an operating profit of 232.3 billion won for the second quarter of 2026. The operating profit surged 182.6% year-on-year, significantly exceeding the consensus (160 billion won) by 45.1%. The key driver was the reflection of approximately 82.9 billion won in one-off profits in the housing and building sector, which pushed the division's gross profit margin (GPM) up to 21.6%. Based on this earnings improvement trend, Daewoo E&C raised its annual order target for 2026 by 50% from the previous 18 trillion won to 27 trillion won. This is a testament to its strong confidence in its competitiveness in winning global gas and power projects.

The government's policy support has also moved into high gear. To encourage domestic production in high-tech industries such as solar, wind, batteries, and semiconductors, the government will temporarily introduce a Domestic Production Tax Credit (the Korean version of AMPC) for 10 years starting from January 1, 2027. It targets domestic production and sales, encompassing finished products and core materials/components such as solar modules/cells, wind nacelles/blades, and battery cells/materials. This is analyzed to provide incentives to revitalize domestic demand for the domestic solar and battery industries, where eco-friendly infrastructure investment has entered a phase of supply shortage.

Pharmaceuticals and Biotech: The Effect of Yuhan Corporation's Global Milestones and Clinical Progress of Domestic Biotechs

The pharmaceutical and biotech sector led the growth stock rally as the results of technology transfers to multinational pharmaceutical companies translated into actual cash inflows. Yuhan Corporation (KOSPI: 000100) recorded consolidated revenue of 639.4 billion won and an operating profit of 66.8 billion won for the second quarter of 2026. Revenue increased by 10.4% year-on-year, and operating profit rose by 34.1%, significantly beating the consensus. This was the result of its operating margin rising to 10.5% following the inflow of European milestones for its non-small cell lung cancer treatment, lazertinib. This proves that the new drug pipelines of domestic pharmaceutical companies have moved beyond the clinical stage and entered a substantive royalty collection cycle.

Clinical progress by domestic biotech companies has also become visible. OliX Pharmaceuticals (KOSDAQ: 226950) announced that it has completed administering the final patient in its Australian Phase 1b clinical trial for its hair loss treatment, 'AR RNAi'. It is analyzed that it has reached the final hurdle of securing the tolerability and safety of the new drug candidate. In addition, Inventage Lab (KOSDAQ: 389470) has fully embarked on its entry into U.S. Phase 2 clinical trials to accelerate the global late-stage clinical development of 'IVL3004', a treatment for drug addiction. Large-cap biotech stock Alteogen (KOSDAQ: 196170) also recorded a 9.29% surge from the previous day, representing the environment of supply and demand influx across growth value stocks.

Market Signals

• Daewoo E&C reflects one-off profits in housing sector: Daewoo E&C's 2Q26 consolidated operating profit recorded 232.3 billion won, achieving a gross profit margin of 21.6% in housing/architecture by reflecting a one-off profit of 82.9 billion won.

• Samsung Electro-Mechanics hikes MLCC unit prices: Samsung Electro-Mechanics finalized a sweeping 30% price increase for Multi-Layer Ceramic Capacitors (MLCC) starting in August, citing supply stabilization.

• Yuhan Corporation receives European milestone revenue: Yuhan Corporation's second-quarter operating profit recorded 66.8 billion won, up 34.1% year-on-year, boosted by the settlement of European value for lazertinib.

• Introduction of the Korean version of AMPC production tax credit: The government decided to temporarily introduce a domestic production tax credit for 10 years starting January 1, 2027, with the goal of revitalizing domestic high-tech industries such as solar and batteries.

Epoch View: Investment Implications

As the expansionary trend of U.S. manufacturing and the stabilizing tone of inflation are confirmed, the trend of fundamental improvement in the domestic financial market is becoming clear. In particular, the successive triggering of sidecars in the KOSDAQ market is interpreted as a signal of returning funds due to the perception of excessive declines. The strategy confirmed in this rebound market is not a temporary momentum following, but a narrowing down to 'earnings-leading companies with global competitiveness'. The Information Technology (IT) component supply chain, which has proven its ability to raise selling prices, and the pharmaceutical and biotech sector, which has confirmed cash flow improvements due to overseas revenue growth, fall into this category. At a time when the global macroeconomic environment has entered a stabilization phase, companies that have demonstrated structural profit growth through the expansion of long-term order guidance are analyzed to continuously secure stock market leadership.

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