Top Investors Load Up on 'Samsung Electronics and SK hynix' Ahead of Earnings Season, with Financials as a Defensive Anchor [The Top 1%'s Picks]

[Financial News] Top-performing investors positioned themselves for earnings season by buying semiconductor stocks such as Samsung Electronics and SK hynix. Expectations for the semiconductor cycle are growing after Micron Technology, the U.S. semiconductor company that kicked off the season, posted exceptionally strong results. Top investors also bought financial stocks as part of a strategy to protect their returns.
According to the detailed trading data for KIWOOM Securities' top-performing customers—defined as the 25,000 customers with the highest returns over the previous three months—released on the 5th, SK hynix was the stock they bought most heavily between the 28th of last month and the 2nd of this month. They purchased shares worth KRW 226.1 billion. Their other major purchases were AI semiconductor-related stocks, including Samsung Electronics at KRW 78.1 billion, Samsung Electro-Mechanics at KRW 23.3 billion, HANMI Semiconductor at KRW 8.6 billion and SK Square at KRW 5.8 billion.
They appear to have anticipated that semiconductor stocks would benefit after Samsung Electronics announces its preliminary third-quarter results on the 8th. The market expects the company to post strong earnings, potentially ushering in an era of quarterly operating profit exceeding KRW 100 trillion. According to FnGuide, as of the 1st, the consensus estimate for Samsung Electronics' consolidated third-quarter operating profit stood at KRW 108.6786 trillion. SK hynix's consensus estimate was KRW 77.2214 trillion, bringing the combined forecast for the two companies to approximately KRW 190 trillion.
Expectations have also been lifted by Micron, often described as a bellwether for the memory market, after it posted record-setting results. Micron announced on the 30th of last month (local time) that its fiscal fourth-quarter revenue for June through August reached $54.23 billion, or approximately KRW 72.8411 trillion, exceeding the consensus estimate of $51.07 billion, or approximately KRW 68.5967 trillion.
Analysts say Micron's earnings announcement eased some of the market's concerns about slowing profitability. They cited an increase in long-term contracts, including Strategic Customer Agreements (SCAs), which reduced uncertainty surrounding the semiconductor profit cycle, as well as growing demand for high-bandwidth memory (HBM).
Hyungkeun Ryu, an analyst at Daishin Securities, forecast, "The market's remaining concern is a slowdown in the pace of profitability improvement, but I believe excessive caution should be avoided. Micron's earnings and guidance once again proved the strength of the cycle. We expect the supply-shortage-driven cycle to expand further."
Expectations for higher dividends also appear to have contributed positively to top investors' buying activity. Kim Woon-ho, an analyst at IBK Securities, said, "The scale of shareholder returns through dividends is expected to reach an all-time high. The more-than-KRW 100 trillion in shareholder returns by memory companies is expected to have a positive effect on their share prices."
During the same period, top-performing investors also bought financial stocks, including Hana Financial Group at KRW 7.9 billion and KB Financial Group at KRW 3.7 billion. Their strategy is to generate stable returns by also purchasing stocks expected to expand shareholder returns in the future.
Seol Yong-jin, an analyst at iM Securities, explained, "Hana Financial Group is relatively sensitive to exchange-rate movements within the sector. As the won has strengthened recently, the company is expected to deliver stable results by offsetting the impact of lower fee income caused by a slowdown in the capital markets. Its common equity tier 1 (CET1) ratio has also improved with the stronger won, increasing its capacity to expand shareholder returns."
Seol Yong-jin added, "KB Financial Group is steadily offsetting the impact of changes in business conditions through its diversified banking and nonbanking portfolio. Because it is expected to implement a dividend policy using tax-exempt dividend resources beginning with this year's year-end dividend and secure additional resources for reduced dividends, I believe its long-term appeal in terms of shareholder returns is high."
[email protected] Im Sang-hyeok Reporter