[Edaily Reporter Park Sun-Yeop ] While the second-quarter earnings season got off to a decent start, analysts say foreign investor sentiment remains a key factor holding back the domestic stock market. The assessment is that even though SamsungElectronics reported record-breaking earnings, its stock price plummeted because selling pressure from foreign investors and uncertainty surrounding the momentum of artificial intelligence (AI) investments played a larger role than the earnings themselves.
Byeon Jun-ho, an analyst at IBK Investment & Securities, stated in a report on the 8th, “The second-quarter earnings season got off to a decent start,” adding, “There are currently no major issues with the fundamentals related to the semiconductor industry.” SamsungElectronics(005930)reported strong second-quarter results with revenue of 171 trillion won and operating profit of 89.4 trillion won. Given that the market consensus was around 85 trillion won, the operating profit is considered a solid figure.

LGELECTRONICS(066570)also recorded an earnings surprise, with its second-quarter operating profit significantly exceeding market expectations. In contrast, LG Energy Solution(373220)succeeded in returning to operating profit after three quarters, but fell short of market expectations. Analyst Byun explained, “Overall, the second-quarter earnings of the three major companies got off to a start that wasn’t particularly bad,” adding, “Micron’s earnings announcement in late June also featured positive forward guidance, and expectations for SamsungElectronics and SK hynix’s third-quarter earnings are likely to be high.”
The issue lies in supply and demand. Analysts suggest that selling pressure from foreign investors is behind the sharp drop in SamsungElectronics’ stock price, despite the company’s solid earnings. Foreign investors have generally maintained a net selling position since the beginning of the year, with the intensity of selling increasing particularly since the second quarter. According to IBK Investment & Securities, they have continued net selling every single day since the 19th of last month.
Analyst Byun noted, “The fact that selling pressure persists regardless of market catalysts—whether positive or negative—is acting as a significant supply-and-demand burden,” adding, “It appears that concerns over a peak in investor sentiment, rather than fundamentals, are driving the continued and intensifying selling pressure from foreign investors despite the semiconductor sector’s string of strong earnings.”
The flow of negative news regarding AI was also cited as a factor shaking investor sentiment. While the AI market—a key Chonbang sector for semiconductors—and the investment environment are still estimated to be favorable, the explanation is that, given the significant rise in semiconductor stock prices, the market may react more sensitively to negative news than to positive developments. Consequently, the earnings reports from U.S. Big Tech companies scheduled for late July and their comments on AI investments have become increasingly important.
The possibility of a peak in semiconductor earnings growth was also cited as a factor explaining foreign selling. While the earnings of SamsungElectronics and SK hynix are expected to trend upward through the second half of this year and into next year, their operating profit growth rates may slow down, with this year marking a short-term peak. IBK Investment & Securities analyzed that foreign investors were net sellers in the second half of 2017, 2021, and 2024—years when SamsungElectronics and SK hynix’s operating profit growth rates peaked.
However, analysts note that it is difficult to make a direct comparison between past semiconductor cycles and the current situation. This is because a new type of business cycle is unfolding, centered on HBM and long-term supply agreements (LTAs). Researcher Byun stated, “If the terms of LTA-related contracts lengthen and their share of earnings continues to grow, cyclical concerns regarding the semiconductor sector could ease,” adding, “This could serve as a rationale for future valuation increases.”
He judged that the likelihood of a further sharp decline in the KOSPI is limited. This is because the recent short-term drop has made the market attractive from a valuation perspective, and concerns about the fundamentals of the semiconductor industry and earnings are limited. Researcher Byun said, “It is unlikely that the KOSPI will immediately enter a bear market with a drop of more than 20% from its peak,” adding, “I expect a strong support level to form around the 7,300-point mark.”
He added, “For the market to show a meaningful rebound trend again, factors that improve investor sentiment regarding AI and the semiconductor sector must emerge, or there must be an active inflow of domestic capital.”