Seoul shares dip as chipmakers struggle post Samsung electronics’ earnings

South Korean stocks experienced a slight decline, influenced by a drop in semiconductor stocks following the announcement of fourth-quarter earnings by chip giant Samsung Electronics.

The South Korean stock market faced a slight decline as semiconductor stocks, including industry giant Samsung Electronics, struggled following the release of fourth-quarter earnings. The benchmark Korea Composite Stock Price Index (KOSPI) slipped by 0.07%, marking a modest downturn. Trade volume stood at 443.1 million shares, with a total value of 8.69 trillion won ($6.50 billion). The market’s performance was influenced by a combination of factors, including the mixed results of overnight trading on Wall Street and the underwhelming financial report from Samsung Electronics.

The global chip industry has been navigating through uncertainties related to supply chain disruptions, geopolitical tensions, and the ongoing impact of the COVID-19 pandemic. Samsung Electronics, a major player in the semiconductor sector, reported a 34.4% year-on-year decline in its fourth-quarter operating profit. This dip was primarily attributed to challenges in the semiconductor business. However, there was a silver lining as the memory chip segment managed to return to profitability, driven by a recovery in demand.

Despite the challenging conditions in recent times, market observers anticipate positive developments for Samsung Electronics. The company is expected to shift towards a net profit in its memory chip business during the first quarter, supported by the recovery in demand for DRAM products. Analysts, such as Kim Dong-won from KB Securities, highlight that Samsung Electronics is poised to enter a phase of full-fledged earnings improvement, primarily driven by an anticipated rebound in DRAM prices.

In Seoul’s stock market, shares related to the semiconductor industry faced declines. Samsung Electronics saw a 2.15% slump, closing at 72,700 won, while chip rival SK Hynix also experienced a decline of 1.61%, ending the trading session at 134,700 won. Additionally, internet portal operators Naver and Kakao witnessed negative trends, falling by 4.30% and 3.31%, respectively, closing at 200,500 won and 52,500 won.

However, not all sectors faced a downturn. Auto and energy-related shares enjoyed robust trading, contributing to the overall market dynamics. Hyundai Motor recorded a 2.42% increase, closing at 194,600 won, while leading chemical manufacturer LG Chem jumped 1.88%, ending the session at 434,500 won.

On the currency front, the Korean won experienced a decline against the U.S. dollar, closing at 1,334.60 won, down by 5.20 won from the previous session’s close. The market sentiment continues to be influenced by a complex interplay of global economic factors, including trade dynamics, geopolitical considerations, and the ongoing technological landscape.

While uncertainties persist, the expectation of a rebound in DRAM prices and the resilience of key industries contribute to a cautiously optimistic outlook. The final decision from the European Commission regarding the merger of Korean Air and Asiana Airlines is anticipated in the coming weeks, marking a crucial development for the high-profile merger that has garnered attention in the aviation sector.