Why Did the Share Prices of Samsung Electronics and SK Hynix Diverge? The Fiercer Battle Is Over Shareholder Returns, Not AI [Why the Market Moves]

[Financial News] The investment formula driving Samsung Electronics and SK hynix is changing. It is no longer about high-bandwidth memory (HBM) or artificial intelligence (AI). The common theme in the securities market these days is shareholder returns. As the AI memory boom is generating huge amounts of cash, the market is now focusing less on how much these companies earn and more on how much they return to shareholders.■Samsung Electronics seen returning 200 trillion won; competition intensifiesAccording to the financial investment industry on the 12th, major brokerages that recently issued investment opinions on Samsung Electronics have consistently pointed to shareholder returns as a key investment theme.
KB Securities estimated that Samsung Electronics' new shareholder return could range from at least 100 trillion won to as much as 200 trillion won a year. That would be far above its current annual return scale.
Kim Dong-won, head of research at KB Securities, said, "Samsung Electronics' free cash flow is rising rapidly thanks to the AI memory boom," adding, "Going forward, the key factor in revaluing the company will be how it returns that cash to shareholders, rather than its earnings alone."
Kim Hyung-tae, a senior analyst at Shinhan Investment Corp., also forecast, "If roughly 250 trillion won in free cash flow in 2026 is actually returned to shareholders, expectations for higher shareholder value will grow."
Son In-jun, an analyst at Eugene Investment & Securities, said, "About 120 trillion won in returns are expected this year under the existing shareholder return policy," and added, "If competition among memory makers over shareholder returns intensifies, it could lead to a structural valuation re-rating."■Shareholder returns over earnings...the stock price moved firstSamsung Electronics fell to the low 230,000 won range on the 6th, then rebounded to 239,500 won on the 11th, recovering much of its losses. By contrast, SK hynix slipped below the 1.5 million won mark on the 6th and has since managed only a gain of less than 1% from the previous day, remaining in the 1.4 million won range.
That trend is difficult to explain based on earnings alone. There has been no major change in demand for AI memory or in the HBM market.
Lee Jae-won, an analyst at Yuanta Securities Korea Co., Ltd., said, "It is ultimately a repetition of the idea that interest rates and shareholder return policies matter," adding, "After the second-quarter earnings season ends, policy variables such as interest rates and shareholder return measures will again emerge as the market's main focus."
The securities industry also says that expectations for shareholder returns at Samsung Electronics are being reflected earlier, while SK hynix is taking a wait-and-see approach until additional return measures are confirmed.
Han Dong-hee, an analyst at SK Securities Co., Ltd., said, "At SK hynix's recent investor relations meeting, investors focused on long-term supply agreements and shareholder returns," adding, "The key to revaluing the memory sector is shareholder returns rather than ADRs, and additional return policies and clearer long-term supply agreements will serve as catalysts for a revaluation of corporate value."■Leverage has cooled, but the debate over market flows is not overIn July, the domestic stock market was heavily swayed by short-term fund flows as single-stock leveraged exchange-traded funds (ETFs) based on Samsung Electronics and SK hynix amplified volatility.
Korea Investment & Securities Co., Ltd. estimated that net selling tied to the rebalancing of KOSPI 200 leveraged and inverse ETFs last month reached a record 6.1 trillion won. Net selling from rebalancing related to Samsung Electronics and SK hynix alone amounted to 4.2 trillion won and 10.2 trillion won, respectively.
Trading has fallen quickly since the financial authorities tightened regulations. Trading value in single-stock leveraged ETFs linked to Samsung Electronics and SK hynix has dropped by about 90% from its peak, while net asset value (NAV) has also fallen by more than 40%.
Still, many in the market say it is too early to conclude that the distortions in supply and demand caused by leverage have been fully resolved. Because the rules mainly target individual investors, there are limits to how much they can change the broader market structure.
Jung Hyun-jong, an analyst at Korea Investment & Securities Co., Ltd., said, "The financial authorities' regulation of single-stock leveraged ETFs has been effective in reducing trading value and rebalancing demand, as it coincides with a decline in net assets caused by the stock market correction," but added, "The balloon effect into semiconductor leveraged ETFs and the possibility of expanded overseas-listed leveraged ETFs still need to be monitored over the long term."
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