[R&E] KOSPI Rebounds 5.89%, KCC Value-Up and Used Battery Turnaround to Profit Amid US Consumption Slowdown and Interest Rate Rebound

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

Global Market Brief

The New York stock market closed lower the previous day, driven by a rebound in Treasury yields following strong macroeconomic indicators and warnings of slowing earnings from major retail companies. The large-cap S&P 500 index fell 0.87% from the previous day to 7,641.16 points, while the tech-heavy NASDAQ Composite Index closed 1.00% lower at 26,067.17 points. The blue-chip Dow Jones Industrial Average also closed down 1.32% at 52,759.21 points.

Concerns over an economic recession eased as the US August Philadelphia Fed Manufacturing Index recorded 47.4, significantly exceeding the market expectation (24.8), and weekly initial jobless claims came in at 206,000, below the estimate (210,000). However, this stimulated concerns about the Federal Reserve's prolonged high interest rates, resulting in the US 10-year Treasury yield being pushed above the 4.70% mark. In addition, Walmart (WMT) announced that its second-quarter US store sales growth rate slowed to its lowest level in six years, causing its stock price to plunge by 9.15% and spreading concerns about a contraction in US consumption. However, in the tech sector, Micron (MU) rose 3.97% on the favorable news of establishing a $10 billion artificial intelligence (AI) memory research center in Boise, Idaho, and the Philadelphia Semiconductor Index also showed a differentiated trend, closing up 0.53% at 11,800.02 points.

Domestic Market Overview

The domestic stock market recorded a steep rebound the previous day, reversing the sharp drop (-5.80%) of the preceding trading day in just one day. The KOSPI index closed at 6,852.58 points, up 5.89% from the previous day, and the KOSDAQ index also rose 1.99% to 840.89 points. Coupled with SK Hynix's announcement of a 40 trillion won share buyback and cancellation plan the previous day and the stabilization of interest rates following the US Treasury's expanded long-term bond buybacks, a massive influx of program buying triggered a buy sidecar. Foreign investors also turned to net buyers, driving the index's rise. In the Seoul foreign exchange market, the dollar-won exchange rate closed at 1,394.4 won, up 5.6 won from the previous day, reflecting the upward pressure on US Treasury yields.

Key Industry Issues and Insights

Semiconductor Materials and Intellectual Property (IP): Emergence of Undervalued Performance Stocks in the Back-End Value Chain
Amid a volatile market where sharp index drops and rebounds intersect, small and medium-sized semiconductor value chain companies demonstrating their undervalued appeal through earnings are emerging. Semiconductor silicon parts manufacturer CMTX (KOSDAQ: 388210) recorded sales of 47.9 billion won (+18.8% YoY) and an operating profit of 15.6 billion won (+14.5% YoY) in 2Q26, continuing its sales growth trend for 11 consecutive quarters. This is the result of stably responding to the expanding demand for aftermarket silicon parts as a partner to Taiwan's TSMC. In the intellectual property (IP) sector, ASICLAND (KOSDAQ: 445090) also successfully turned to a quarterly profit, recording sales of 59.7 billion won (+306.6% YoY) and an operating profit of 7.9 billion won in 2Q26. The expansion of cooperation with SK Hynix in developing eSSD controllers serves as evidence of the growth of the domestic system semiconductor ecosystem.

Eco-Friendly Materials: The First Year of Turning to Profit for Used Battery Recycling
Amid the strengthening of global environmental regulations and the trend toward mandatory battery recycling, the profitability recovery of domestic eco-friendly material companies is materializing. SungEel HiTech (KOSDAQ: 365340), a leader in the used battery recycling sector, successfully turned to profit for the first time in 12 quarters, recording sales of 76.8 billion won (+20.0% YoY) and an operating profit of 6.3 billion won in 2Q26. This is an earnings surprise that exceeded the market consensus (operating profit of 1.7 billion won) by 272%, resulting from offsetting the fixed cost burden through increased utilization rates at the Saemangeum Plant 3. The trend toward mandatory battery recycling centered in Europe and North America suggests that this will lead to an expansion of long-term order backlogs for domestic eco-friendly material companies.

Holding Companies and Value-Up: Spread of Shareholder Returns Leading to Share Cancellation and Special Dividends
Following the shareholder returns of large semiconductor stocks, large holding and material companies are also successively materializing their corporate value enhancement plans. KCC (KOSPI: 002380) disclosed its 2026 corporate value enhancement plan, which includes establishing a special dividend linked to Samsung C&T's special dividends and canceling 13.2% of its 17.2% treasury shares in installments by September 2027, excluding those for employee compensation purposes. This structure returns the cash flow from its holdings in Samsung C&T to KCC shareholders, and is analyzed as a measure capable of boosting the dividend yield by 2.5 to 4 percentage points compared to when there is no special dividend. It demonstrates that the trend of shareholder returns is spreading beyond large semiconductor stocks to the broader holding and materials sectors.

Market Signals

• US August Philadelphia Fed Manufacturing Index Surprise: Recorded 47.4, significantly exceeding the market expectation (24.8), easing recession concerns but stimulating a rebound in Treasury yields.

• Walmart Earnings Shock: Walmart announced its second-quarter US store sales growth slowed to the lowest level in six years, leading to a 9.15% plunge in its stock price and heightening concerns about US consumption contraction.

• Domestic Household Debt Surpasses 2,000 Trillion Won: The household credit balance surpassed 2,000 trillion won for the first time, stimulating concerns about a contraction in the domestic economy, and financial authorities are reviewing macro-prudential measures such as additional loan regulations.

• International Oil Prices Rise on Geopolitical Risks: The price of West Texas Intermediate (WTI) crude oil recorded $86.83 per barrel, up 2.89% from the previous day, as geopolitical risks resurfaced, including remarks by President Trump regarding executing economic sanctions and operations against Iran.

Epoch View: Investment Implications

The KOSPI's rebound, which reversed the previous trading day's sharp drop in a single day, is the combined result of the will for shareholder returns by domestic large-cap stocks and interest rate stabilization measures by the US Treasury. However, concerns about the US consumption slowdown triggered by Walmart's earnings and the re-rising long-term Treasury yields remain as external variables testing the sustainability of the rebound. In such a phase, rather than chasing trades betting on the index's direction, a valid strategy is to narrow the focus to individual companies that have proven their fundamental earning power through second-quarter results regardless of volatility. Undervalued performance stocks in the semiconductor back-end value chain, the turnaround to profit in used battery recycling, and the trend of shareholder returns spreading to holding and material sectors are verifiable signals of earnings and capital allocation even amid macro noise. Ultimately, a selective approach centered on companies that have numerically proven their concrete order backlogs and shareholder return plans is required.

This content was generated by News Epoch's proprietary AI algorithm, which tracks and analyzes public data from major domestic securities 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 any specific stock.