Even “Hynix at ₩1.29 million” sounds unfamiliar... SK Hynix’s share buyback ends on the 22nd

[Financial News] With domestic stock market trading value down to less than half its level in June, SK Hynix’s share buyback has also entered its final stages. There are concerns that the supply-demand gap could widen as buying demand—which had absorbed selling by not only foreign investors but also individual and institutional investors—is exhausted.■ Trading value halves; Hynix’s share buyback also nearing completionAccording to the Korea Exchange on the 21st, the KOSPI market’s average daily trading value from the 1st to the 20th of this month was 21.5447 trillion won. That was down 57.2% from 50.3471 trillion won in June. Trading value fell to 36.8754 trillion won in July, 25.846 trillion won in August and 21.3605 trillion won in September, and has remained in the low 20-trillion-won range this month.
The share buyback, which has absorbed selling amid sluggish trading, is also nearing completion. By the previous day, SK Hynix had bought 23.25 million of the 24.07 million shares it planned to acquire. The execution rate by volume was 96.59%, leaving 820,000 shares. If all 472,080 shares requested for acquisition today are purchased, the remaining amount will fall to 347,920 shares. The acquisition deadline is the 19th of next month, but given the recent pace of buying, the buyback could be completed in a single day, on the 22nd. Cumulative purchases through the previous day totaled 39.4269 trillion won.
The share buyback had served as a backstop, effectively absorbing all the shares sold by foreign investors, individuals and institutions. From August 20 through the 20th of this month, foreign investors net sold 27.6805 trillion won worth of SK Hynix shares, while individuals and institutions net sold 8.3072 trillion won and 3.1302 trillion won, respectively. Their combined net selling totaled 39.118 trillion won. Other corporations, by contrast, net bought 39.1714 trillion won, an amount equivalent to all those sales. Since the actual share buyback totaled 39.4269 trillion won, the company’s direct purchases had been supporting the supply-demand balance.■ Limited capacity for further buying; month-end shareholder returns a key factorIf Hynix completes its buyback after Samsung Electronics, the burden of absorbing shares sold in major semiconductor stocks will shift to other investors. Samsung Electronics completed its share buyback on the 6th, after which individual investors took over buying. Analysts say Hynix will also need new buying demand to come in or selling pressure to ease once its existing buyback allocation is exhausted in order to maintain a supply-demand balance.
One concern is that those expected to make additional purchases are already facing the burden of losses. An asset management firm official said, “There need to be investors willing to buy at lower share prices and hold for the long term, but major investors such as pension funds and individual investors are already sitting on losses.” The official added, “For the share price to rise, the overhang of shares piled up above it needs to be cleared.”
However, a decision to conduct another share buyback could ease the gap. SK Hynix is expected to announce additional shareholder return measures when it releases its third-quarter results at the end of this month. The market is focused on the amount of the returns, how much will be allocated to share buybacks, and when they will actually be carried out. Dividends are also a form of shareholder return, but their effect on supply and demand differs from that of a share buyback, through which the company directly absorbs shares offered on the market.
Hana Securities analyst Kim Rok-ho said, “Based on free cash flow, we expect at least 30 trillion won in additional funds for shareholder returns,” adding, “Share buybacks and retirements are likely to be favored over dividends.”
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