[R&E] Buy Sidecar Activated Amid 3.68% KOSPI Surge, Driven by Samsung Electronics' Rebound and Strong Cosmetics & Securities Earnings

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Global Market Brief

The US July Consumer Price Index (CPI) met market expectations, leading an inflation relief rally. In the New York stock market the previous day, the tech-heavy NASDAQ Composite closed at 26,588.49 points, up 0.54% from the previous day, and the blue-chip S&P 500 index also rose 0.26% to record 7,748.50 points. Meanwhile, the Dow Jones Industrial Average, which has a high proportion of traditional industries, closed slightly down by 0.04% at 53,770.27 points, remaining flat.

The July CPI released by the US Department of Labor rose 3.4% year-on-year and 0.1% month-on-month, matching market consensus. Core CPI, which excludes food and energy, also rose only 2.5% year-on-year and 0.2% month-on-month, maintaining a gradual path of inflation moderation. As a result, monetary policy vigilance was partially relieved, strengthening expectations of an interest rate freeze at the September Federal Open Market Committee (FOMC) meeting. Treasury yields saw a slight increase in the 10-year note to 4.6925% (+0.4bp), while the 2-year yield, sensitive to policy rates, retreated to 4.2011% (-1.3bp). International oil prices remained stable, with West Texas Intermediate (WTI) rising 0.08% from the previous day to $83.27 per barrel. This is the result of a virtuous cycle where stabilized US inflation eases deleveraging pressures in the global financial market and stimulates buying in tech stocks.

Domestic Market Overview

The easing of US-led inflationary pressure and the return of foreign demand centered on large-cap semiconductor stocks triggered an explosive surge in the domestic stock market. The previous day, the KOSPI index recorded 6,579.04 points, up 3.68% from the previous day. Buying pressure coalesced strongly, prompting the activation of a temporary suspension of program purchase orders (buy sidecar) during intraday trading. This is the first time a buy sidecar has been activated in the KOSPI market since August 5. On the other hand, the KOSDAQ index only rose slightly by 0.12% from the previous day to 858.91 points, showing a market bias concentrated on large-cap stocks.

In the Seoul foreign exchange market, the USD/KRW exchange rate closed at 1,417.0 won, up 5.9 won from the previous day, continuing to record high volatility. Despite the pressure of a weak won, a massive influx of foreign capital, including non-arbitrage program trading, flowed into the stock market, driving the index's rise. In particular, top market-cap stocks Samsung Electronics and SK hynix surged by 6.68% and 5.54% respectively, driving a significant portion of the overall index's gains. The VKOSPI index, which indicates market volatility, also plummeted 9.0% from the previous day to the 56-point level, suggesting that systemic risk sentiment in the financial market is rapidly calming down. Today's regular market is expected to seek an upward trend as the relief in the US market the previous day intertwines with solid earnings momentum in the semiconductor and cosmetics sectors.

Key Industry Issues & Insights

Semiconductor & IT Infrastructure: Record-High Export Indicators and Reorganization of Global Production Bases
South Korea's export growth engine has been re-proven by overwhelming performance indicators for memory semiconductors. According to preliminary export statistics for August 1-10, total exports grew by 45.3% year-on-year to $21.3 billion, of which semiconductor exports surged 155.4% year-on-year, accounting for 46.8% of total exports. This demonstrates that prolonged tight supply and demand conditions for Artificial Intelligence (AI) High Bandwidth Memory (HBM) and high-capacity DRAM are driving top-line growth through unit price increases.

The moves of large manufacturers to strengthen facility investment and dominance in next-generation packaging have also accelerated. Samsung Electronics (KOSPI: 005930) set out to retake leadership in ultra-fine processes by fully introducing High-NA EUV technology starting from the 1-nanometer process. SK hynix (KOSPI: 000660) will also hold a groundbreaking ceremony for its Indiana packaging plant in the US on the 27th to accelerate local supply chain diversification, while simultaneously finalizing a specific implementation plan to resume operations at its second Dalian plant in China during the first half of the year, increasing NAND flash production capacity in China by 50% by the first half of 2027. This is a strategic choice to maximize the efficiency of core production facilities even amidst US-China tensions.

Consumer Goods & Beauty: K-Beauty's Stature Proven by Surpassing 100 Billion Won in Operating Profit for the First Time in a Single Quarter
The cosmetics ODM value chain is driving a valuation re-rating across the sector by repeatedly breaking all-time high performance records based on robust global demand. Kolmar Korea (KOSPI: 161890)'s consolidated sales in the second quarter increased 17.8% year-on-year to 861.3 billion won, and operating profit rose 50.1% to 110.3 billion won. This is the first time in the history of Korean cosmetics ODMs that quarterly operating profit has exceeded 100 billion won. The surge in the sales proportion of high-margin sun care products to 35% and the record operating profit margin of 16.4% for the separate domestic entity drove the company-wide profitability growth.

Competitor COSMAX (KOSPI: 192820) and raw/subsidiary materials manufacturer Pumtech Korea (KOSDAQ: 251970) also announced record-high second-quarter earnings the previous day, confirming concurrent growth across the entire K-Beauty value chain. COSMAX recorded an operating profit of 73.7 billion won (+21.2% YoY) with its US subsidiary turning a profit for the first time, and Pumtech Korea rewrote its highest quarterly profit with an operating profit of 21.7 billion won (+11.4% YoY). This demonstrates that the activation of overseas sales of finished K-Beauty products is inducing top-line expansion and profitability enhancement throughout the entire raw and subsidiary materials manufacturing value chain.

Automobile & Mobility: Confrontation Between the European Soft Landing of New EVs and Cumulative Production Disruption Risks
Hyundai Motor Group's achievements in diversifying its global electrification portfolio are clashing tightly with the risk of large-scale production vacuums caused by domestic union strikes. Kia (KOSPI: 000270)'s compact electric vehicle EV2 made a soft landing by recording 8,567 units in sales in Europe during the first half of the year. Sales accelerated, in particular, by delivering over 8,000 units in the second quarter alone. Its high product quality, driving 448km on a single charge, was effective. This is an achievement made in an intensified competitive environment where the market share of Chinese brands in Europe is soaring to 12.1%, indicating differentiated competitiveness.

However, the uncertainty of domestic production lines has emerged as a factor undermining short-term corporate performance. The Hyundai Motor (KOSPI: 005380) union resolved to stage consecutive partial strikes, demanding an increase in base pay and an expansion of performance bonuses. The cumulative production disruption caused by successive strikes and refusals of overtime work amounts to approximately 42,510 units, and the industry estimates the revenue loss to be at least 1.8 trillion won. This suggests concerns that the earnings momentum stemming from strong exports could be diluted by a supply vacuum caused by union risks.

Finance & Securities: Mirae Asset Securities' Record Performance Driven by Valuation Gains on Unlisted Alternative Assets
While large domestic securities firms continue their solid performance trends in the first half of the year, the revaluation of investment assets has emerged as a key variable increasing profit volatility. Mirae Asset Securities (KOSPI: 006800) announced strong results, recording a consolidated net profit attributable to controlling interests of 1.9052 trillion won in the second quarter, a 370.1% surge year-on-year. In addition to the growth in domestic and overseas stock brokerage commission income, this is the result of reflecting a 1.6242 trillion won valuation gain on its stake in the US aerospace company SpaceX into its consolidated pre-tax profit.

However, this profit growth based on alternative investment assets also simultaneously entails the risk of being exposed to future stock price volatility. In fact, SpaceX's stock price underwent an adjustment of about 20% from $170 at the end of June to $133 as of August 11. It carries a structural limitation where a $1 change in stock price alters the valuation gain by approximately 29 billion won, presenting the possibility of causing expanded volatility in third-quarter earnings. In addition, the increased tax burden due to the strengthening of education tax taxation is also acting as a factor pressuring selling, general and administrative (SG&A) expenses.

Market Signals

• Easing of US July Consumer Prices: The US July CPI rose 3.4% year-on-year, fully meeting expectations and supporting hopes for an interest rate freeze at the September FOMC meeting.

• Kolmar Korea's Quarterly Operating Profit Surpasses 100 Billion Won: Kolmar Korea recorded a consolidated operating profit of 110.3 billion won (+50.1% YoY) in the second quarter, surpassing 100 billion won in quarterly operating profit for the first time in the history of Korean cosmetics ODMs.

• Mirae Asset Securities' Record-High Performance: Mirae Asset Securities recorded a consolidated net profit attributable to controlling interests of 1.9052 trillion won (+370.1% YoY) in the second quarter, but a 1.6242 trillion won valuation gain from SpaceX is reflected in this figure, leaving the possibility of expanded volatility in the third quarter.

• KEPCO's Continuing Cost Pressure: Korea Electric Power Corporation (KEPCO) (KOSPI: 015760)'s operating profit for the first half of the year was 4.9 trillion won, down 16.6% year-on-year, and its second-quarter operating profit fell below market expectations due to the impact of increased fuel costs. [DART Disclosure]

Epoch View: Investment Implications
The relief over the US Consumer Price Index (CPI) the previous day and the activation of a buy sidecar in the domestic stock market are the combined results of mitigated macro uncertainties and the strong earnings power of export-driven companies. It is encouraging that leading sectors such as semiconductors and cosmetics have realized record-high quarterly profits, squarely dispelling market concerns about peaking out. However, the occurrence of actual revenue disruptions due to the prolonged strike by the Hyundai Motor union and the volatility of unlisted asset valuations in the securities industry remain persistent risk factors threatening the earnings stability of individual companies. Ultimately, the future stock market is expected to move away from simply tracking macro indicators and develop into a compressed market centered on companies that can prove, with numbers, their cost control capabilities and definitive fundamental improvements based on structural demand expansion.

This content was generated 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. It is an objective summary based on collected data and does not constitute a solicitation or recommendation for investment in any specific stock.