Concerns over foreign selling and AI profitability weigh on market sentiment
Category: Business
Samsung Electronics (삼성전자) has reported an impressive operating profit of 110 trillion won ($82 billion) for the third quarter of 2026, yet its stock price has experienced a notable decline. On October 12, the KOSPI index closed at 6,384.24, down 3.65% from the previous day, marking the fourth consecutive day of losses. Samsung’s shares fell by 4.39% to 250,500 won, and SK Hynix (SK 하이닉스) dropped 4.52% to 1,605,000 won, highlighting a troubling trend in the semiconductor sector.
The recent decline in stock prices comes as foreign investors have been selling off shares in major semiconductor companies, contributing to a broader downturn in investor sentiment. This situation has raised questions about the sustainability of the semiconductor sector's recovery, particularly as the market grapples with external pressures such as rising oil prices and interest rates.
Analysts suggest that the market's focus is shifting from the scale of Samsung's earnings to the potential for future growth and changes in market expectations. The semiconductor industry is expected to benefit from increased investment in artificial intelligence (AI) and an improving memory chip market. Yet, whether earnings forecasts can be raised sufficiently to meet already high expectations remains a key factor influencing stock prices.
"The ability to generate profits has not been compromised, so it is difficult to conclude that falling stock prices indicate a deterioration in market conditions," said Cha Young-joo, head of Wise Economic Research Institute, in a recent YTN radio broadcast. He emphasized that the current market dynamics are complex, driven by foreign selling and a tightening of investor sentiment.
On October 13, Cha pointed out that the KOSPI's decline below the 6,400 mark is a concerning trend, stating, "At this point, 6,200 is the next support level, and if that is breached, we could see a drop to 6,000, which is a key threshold." This sentiment reflects a broader anxiety among investors, who are closely monitoring the performance of major stocks like Samsung and SK Hynix.
The recent downturn has also been attributed to concerns surrounding the profitability of AI companies. Analysts have noted that money is currently circulating primarily within AI firms, raising questions about the sustainability of these profits. As Cha explained, "Investors are now scrutinizing the sources of profit and the pace of growth, leading to a more cautious investment environment."
Market participants are awaiting the upcoming earnings reports from ASML and TSMC, which could influence sentiment. Cha cautioned that, even if these companies report strong results, their performance may not directly correlate with the profitability of AI investments. "ASML and TSMC are involved in different aspects of the semiconductor industry, and their success does not necessarily translate to AI profitability," he noted.
Foreign selling has been a persistent issue, with Samsung experiencing net foreign sales of approximately 4.7 trillion won ($3.5 billion) from September 28 to October 12, and SK Hynix facing net sales of around 11.2 trillion won ($8.4 billion). This trend has raised concerns about the speed at which earnings improvements will be factored into stock prices. As long as foreign selling continues, the recovery of stock prices may be delayed, even if earnings forecasts improve.
Market analysts are carefully observing the balance between earnings forecasts and foreign investment flows. If foreign selling subsides and earnings projections continue to rise, there may be potential for stock prices to recover. Conversely, if earnings estimates improve but foreign investment remains weak, sustaining any rebound will be challenging.
Cha also highlighted the impact of external factors on the market, such as rising oil prices and the U.S. 10-year Treasury yield maintaining a level above 5%. These elements create additional pressure on the market, complicating the investment climate for semiconductor stocks. "The market remains tense until foreign buying resumes," he concluded.
In the longer term, the semiconductor sector is expected to benefit from the expansion of AI investments and rising memory prices. If demand increases and earnings projections are confirmed, the recent stock price declines may not indicate a fundamental shift in the industry outlook. Nevertheless, analysts caution that the timing of earnings improvements and stock price increases may not align, especially if the market is already anticipating high growth rates.
As the market continues to navigate these challenges, the focus will likely shift toward identifying sectors and companies with clearer earnings visibility. The semiconductor industry will remain sensitive to changes in memory prices, demand forecasts, and foreign investment trends. Key external variables, including inflation indicators and earnings reports from major technology firms, will also play a role in shaping the direction of the domestic market.
In this environment, the attention of investors and analysts alike will be on how Samsung can leverage its record earnings to lift future growth expectations and stabilize stock prices. The ability to maintain momentum in the face of foreign selling and external pressures will be a determining factor for the semiconductor sector's performance in the coming months.
As the market grapples with these dynamics, the upcoming earnings reports from ASML and TSMC will be closely watched, with many hoping they will provide a boost to investor confidence and help stabilize the KOSPI index.