[Edaily Reporter Kim Kyung-eun ] Share buybacks by Samsung Electronics and SK Hynix have emerged as a powerful supply-and-demand driver, lifting the KOSPI out of a sharp sell-off. Although all three investor groups—retail investors, foreign investors, and institutions—unusually engaged in net selling simultaneously, the two companies’ share buybacks absorbed nearly 1.6 trillion won worth of selling pressure. Analysts note that share buybacks have emerged as “major players” capable of influencing not only individual stock prices but also the overall direction of the index.

◇Reversed a 3% Plunge… “Share Buybacks” Provide Downside Support

According to MP Doctor on the 31st, the KOSPI closed at 6,820.02, up 31.14 points (0.46%) from the previous trading day. Early in the session, the index plummeted by more than 3% amid a confluence of factors, including concerns over further U.S. monetary tightening, caution regarding the growth of China’s Changxin Memory (CXMT), and geopolitical tensions in the Middle East.

What pulled the index back up was buying pressure from “other corporations” stemming from share buybacks by Samsung Electronics and SK Hynix. “Other corporations” refers to general corporations not classified as retail investors, foreign investors, or institutions. When a listed company directly acquires its own shares, those purchases are counted under “other corporations.”

“Other corporations” made net purchases totaling 1.579 trillion won in the market that day. This marks the ninth consecutive trading day of buying since SK Hynix decided to repurchase its shares on August 19, and the eighth consecutive trading day since the 20th with net purchases in the 1 trillion won range.

On this day, retail investors made net sales of 146.4 billion won, foreign investors of 643.4 billion won, and institutional investors of 789.1 billion won. This marks the first time in approximately 8 years and 10 months—since October 18, 2017—that retail investors, foreign investors, and institutional investors have all simultaneously made net sales on the KOSPI.

In past instances of simultaneous net selling observed since the 2010s, the combined net selling amount by these three groups never exceeded the low 100 billion won range. In contrast, today’s net selling totaled 1.5789 trillion won—more than ten times larger—but “other corporations” absorbed the entire amount.

Of the net purchases made by “other corporations,” the net purchases directed toward Samsung Electronics and SK Hynix alone totaled 1.5455 trillion won, accounting for 98% of the total. This represents an unusual supply-and-demand structure, unlike past instances of simultaneous net selling, where share buybacks determined the direction of the index.

Lee Kyung-min, an analyst at Daishin Securities, stated, “The domestic stock market opened lower as it digested external factors such as the Jackson Hole Symposium and the military conflict between the U.S. and Iran, but excessive caution eased as the upward trend in U.S. Treasury yields subsided.” He added, “With net purchases by ‘other corporations’ supporting the bottom line for the top two semiconductor companies, and large-cap semiconductor stocks recovering their intraday losses, the domestic stock market showed a pattern of weakness in the morning followed by strength in the afternoon.”

◇“Remaining Buyback Allocation Provides Rebound Momentum… Buffers Foreign Investor Vacuum”

The securities industry is focusing on the fact that Samsung Electronics and SK Hynix still have significant capacity remaining for share buybacks. Since the two companies have not yet completed even 20% of their share buyback plans, the outlook is that share buybacks will remain a major supply-and-demand driver in the domestic stock market for the time being.

Samsung Electronics has decided to directly acquire 53,285,968 shares, worth approximately 15 trillion won, from August 24 through November 21. As of today, it has purchased 9.8 million shares, completing 18.39% of the planned volume. The cumulative transaction value stands at 2.5494 trillion won.

SK Hynix also plans to directly acquire 24,070,000 treasury shares, totaling 40.0043 trillion won, from October 20 through November 19. To date, the company has purchased 4,550,000 shares, representing 18.9% of the planned volume. The cumulative transaction value stands at 7.7283 trillion won. Although the two companies have spent a total of 10.2777 trillion won since beginning their buybacks, their progress relative to the planned volume remains below 20% for both. This suggests that the structure in which other corporations influence overall supply and demand in the KOSPI market may continue for the time being.

Noh Dong-gil, an analyst at Shinhan Investment Securities, stated, “A unique variable specific to the Korean stock market—large-scale shareholder returns—has emerged,” adding, “Since Samsung Electronics and SK Hynix still have funds remaining in their share buyback plans, domestic demand has been secured to cushion the gap left by foreign investors.” He continued, “The role of share buybacks is to limit price declines and absorb floating shares during the same selling shock,” and predicted, “If the global semiconductor sector declines again, share buybacks may remain limited to defensive demand; however, if volatility subsides and foreign selling stops, the remaining buyback amounts will boost the momentum for a rebound.”