Samsung Electronics, SK hynix rebound on chip supply constraints, AI demand

Samsung Electronics Co. and SK hynix Inc. rebounded sharply early Wednesday, as bargain hunting and strong artificial intelligence (AI) demand lifted investor sentiment.

Samsung Electronics shares were trading at 221,000 won ($166.52) as of 9:14 a.m., up 4.49 percent from the previous session, while SK hynix shares gained 5.64 percent to 1.292 million won.

The rebound followed a sharp sell-off on Tuesday. Sentiment also improved after reports that Chinese companies had placed more than $35 billion in orders with Nvidia Corp. but might receive only 5 percent to 10 percent of the requested products due to supply shortages.

Elon Musk’s remarks that demand for AI computing far exceeded supply may have provided additional support.

Space Exploration Technologies Corp. (SpaceX), Musk’s aerospace company, reported a 161 percent year-on-year increase in third-quarter revenue and returned to profitability, according to results released early Wednesday, Korea time.

Overnight on Wall Street, the Dow Jones Industrial Average and the S&P 500 rose 1.02 percent and 0.28 percent, respectively, while the Nasdaq Composite edged down 0.02 percent. The Philadelphia Semiconductor Index pared an early loss of as much as 2.41 percent to close down 0.29 percent.

Reports of easing unrest in France and progress in negotiations between the United States and Iran coincided with stabilization in oil prices and U.S. Treasury yields, easing concerns over the cost of financing big tech companies’ AI investments.

Across the broader Kospi market, foreign investors were net buyers of 43.3 billion won worth of shares as of 9:14 a.m., while retail investors and institutions were net sellers of 43 billion won and 50.7 billion won, respectively.

In the Kospi electrical and electronics sector, foreign investors recorded net purchases of 49 billion won, while retail investors and institutions posted net sales of 78.9 billion won and 20.8 billion won, respectively. Other corporations were net buyers of 50.7 billion won worth of shares in the sector.

The buying came as Samsung Electronics recently completed a share repurchase program intended to fund employee stock compensation. SK hynix is expected to complete its 40 trillion won share buyback and cancellation program on Wednesday.

Meanwhile, the stocks of Korean companies linked to SpaceX rose early Wednesday after the aerospace company reported third-quarter earnings above market expectations.

Sphere Corp. was trading at 22,600 won, up 4.39 percent as of 9:19 a.m., after rising as much as 9.01 percent earlier. HVM Co. gained 2.18 percent to 65,500 won after climbing as much as 9.05 percent to 69,900 won early in the session.

SpaceX reported third-quarter revenue of $14.58 billion, up 161 percent from a year earlier and above the market forecast of $12.72 billion. Operating profit reached $2.79 billion, reversing losses from a year ago and the previous quarter.

Sphere and HVM have been cited as participants in SpaceX’s supply chain.

Separately, shares of A Plus Asset Advisor Co. rose early Wednesday after the insurance general agency announced plans to increase shareholder returns.

A Plus Asset Advisor was trading at 12,280 won, up 10.73 percent from the previous session, as of 9:43 a.m.

The company said its board had approved a trust agreement to repurchase 3.5 billion won worth of its own shares, citing stock price stabilization and enhanced shareholder value as the objectives.

A Plus Asset Advisor also announced a corporate value enhancement plan calling for a consolidated return on equity of at least 15 percent by 2030 and a total shareholder return ratio of at least 40 percent.