Easing U.S. rates and shareholder returns lift KOSPI, led by Samsung Electronics and SK hynix [Morning Market Update]

[Financial News] The KOSPI approached the 6,700 level in early trading as the U.S. Treasury market stabilized after the United States government expanded its buyback program, while SK hynix also unveiled a massive shareholder return plan.
As of 9:50 a.m. on the 20th, the KOSPI was trading at 6,754.54, up 283.37 points, or 4.38%, from the previous session. The index opened at 6,680.34, up 209.17 points, or 3.23%, from the previous day.
On the Korea Exchange Main Board, foreign investors and institutions were locked in a tug-of-war. Individuals and institutions were net sellers of 35.9 billion won and 154.5 billion won, respectively, while foreigners were net buyers of 38.2 billion won.
Investor sentiment improved as the recent surge in long-term U.S. Treasury yields eased. The U.S. Department of the Treasury said it will expand the size of its buybacks for long-dated Treasuries with maturities of 10 to 20 years and 20 to 30 years to at least twice the current maximum of $2 billion per operation.
Kwon Hee-jin, a researcher at KB Securities, said, "The Treasury Department made clear that the policy backdrop is its intention to expand liquidity support in the long-bond segment," adding, "It is not a fundamental solution, but it is aimed at easing the sharply worsened anxiety in the long-bond market for now."
She added, "The July spike in yields was so steep, most of the uncertainty factors have already been revealed, and the Treasury Department's determination to stabilize long-term rates is clear," and said, "I expect the upward trend in long-term yields to pause for the time being."
Strength in major semiconductor stocks is also driving the index higher. In particular, SK hynix sharply improved investor sentiment after unveiling a large-scale shareholder return plan the previous day, including 4 trillion won in share buybacks and full cancellation of the repurchased shares.
SK hynix plans to buy back 24.07 million common shares on the market and then cancel all of the repurchased shares. The planned purchase amount is 4,000,434,000,000 won. It also decided to raise shareholder returns from cumulative free cash flow during the three-year shareholder return period from the previous "within 50%" range to "more than 50%."
 
SK hynix's large-scale shareholder return plan is also raising expectations for Samsung Electronics. Samsung Electronics has already said it will use 50% of this year's free cash flow for shareholder returns. As the current three-year shareholder return policy is set to end this year, the market is also watching for possible additional measures such as share buybacks and cancellations or special dividends.
As a result, Samsung Electronics, the country's largest company by market capitalization, and SK hynix, which ranks second, both posted strong gains and led the KOSPI's rebound. Samsung Electronics was trading at 262,750 won, up 6.16% from the previous session, while SK hynix was up 9.27% at 1,639,000 won. SK Square rose 6.47%, Samsung Life Insurance gained 5.07%, and Samsung C&T Corporation advanced 4.03%. By contrast, KB Financial Group fell 2.22%, Mobile Tactical Cannon program dropped 0.76%, and Kia Corporation edged down 0.08%.
 
[email protected] Kim Hyun-jung Reporter