“Samsung Electronics Co., Ltd. Shares Nearly Halved, 97% Chance of Rebound Within 3 Months”... Decisive Reason Behind ‘Record-Breaking’ Analysis

[Financial News] A securities industry analysis says the share prices of Samsung Electronics Co., Ltd. and SK hynix, which have recently plunged nearly 50% from their recent highs, are likely to rebound soon. The recent declines were driven not by a deterioration in semiconductor industry conditions but by short-term supply-demand imbalances resulting from large-scale position unwinding by global hedge funds and a surge in short selling. The outlook is that, once selling pressure subsides, short covering (buying shares back to close short positions) will flow in and drive share prices higher.

On the 12th, Kim Dong-won, head of research at KB Securities, said in a report, “As of November, a surge in short selling of global tech stocks and record selling pressure from hedge funds have pushed supply-demand imbalances to extremes.” He added, “Now is the time to focus on the possibility that selling pressure will ease and supply-demand conditions will improve as short covering flows in.”
According to KB Securities, as of the fourth quarter of this year, short interest in global tech stocks had surged 46% from the start of the year, far outpacing the 32% increase in long positions in tech stocks over the same period. About one-third of the increase in short positions across global equities was concentrated in tech stocks. This is seen as the result of short-term bearish bets shifting toward tech stocks amid uncertainty over AI regulation after the U.S. midterm elections and concerns about intensifying competition among AI companies to raise capital.
Hedge funds’ large-scale cuts to their borrowed investment positions (deleveraging) also exacerbated the supply-demand imbalance. The scale of hedge funds’ position unwinding this month is estimated to have come close to its highest level in about 10 years, since 2016.
Kim said, “Concentrated position unwinding over a short period widened the gap between the fundamentals (underlying strength) and share prices of memory chipmakers such as Samsung Electronics Co., Ltd. and SK hynix to a historic high.” He assessed that “the recent share-price correction is more strongly characterized by short-term supply-demand volatility than by damage to structural growth prospects.”

By contrast, the semiconductor industry’s earnings outlook and momentum are still considered solid. Buoyed by increased investment in AI data centers and rising memory demand, earnings estimates for 2027–2028 for Samsung Electronics Co., Ltd. and SK hynix are actually being revised upward. The fact that the two companies plan to announce additional shareholder return policies next January is also seen as a positive factor supporting a future recovery in valuation (share price relative to earnings).
Historical data also support the possibility of a rebound. KB Securities’ analysis of share-price movements for Samsung Electronics Co., Ltd. and SK hynix over about 20 years since 2005 found that the average probability of prices turning higher within three months after falling 40–50% or more from their peaks was about 90%. By company, the figure was 97% for Samsung Electronics Co., Ltd. and 81% for SK hynix.
Kim emphasized, “In past tech stock corrections, extreme increases in short selling and reductions in leverage raised the risk of short-term declines, while also acting to maximize rebound momentum as supply and demand normalized.”
[email protected] Mun Yeong-jin Reporter