Kospi recovers 8,300 level ahead of Samsung Electronics earnings; will foreign investors return?

The Kospi recovered the 8,300 level during intraday trading Monday, driven by gains in the country's two dominant semiconductor stocks and strong buying from retail investors.

According to Korea Exchange, the Kospi stood at 8,284.47 as of 9:44 a.m. Monday, up 2.42 percent from the previous session. The index opened up 1.22 percent at 8,186.82 and extended its gains through the morning, briefly touching 8,319.38 to reclaim the 8,300 mark.

On Friday, the Kospi had closed up 5.76 percent at 8,088.34, buoyed by a sharp rally in large-cap semiconductor shares. That session saw the index reclaim the 8,000 level after a 7.89 percent drop the day before, and Monday's gains extended the recovery.

Samsung Electronics rose 4.20 percent to 322,500 won ($209), while SK hynix climbed 1.86 percent to 2.47 million won.

Samsung Electronics' advance appeared to reflect investor anticipation ahead of its preliminary second-quarter earnings release Tuesday. The market consensus for Samsung Electronics' consolidated second-quarter operating profit stands at 84.58 trillion won, which would represent a more than 1,708 percent increase from the same period a year earlier. Analysts expect the semiconductor division alone to post operating profit exceeding 80 trillion won.

SK hynix's gains were seen as partly driven by expectations surrounding its American depositary receipt listing Thursday.

Other large-cap stocks also advanced, with SK Square up 4.59 percent, Samsung Electronics preferred shares up 4.57 percent and Hyundai Motor up 2.24 percent.

Defense shipbuilder Hanwha Ocean surged more than 12 percent in early trading as investors awaited an announcement on Canada's next submarine project contract.

The move came after reports that the outcome of the Canadian Patrol Submarine Project, in which Hanwha Ocean is competing against a German firm, could be announced as early as Monday evening or in the early hours of Tuesday.

Retail investors net purchased 404.6 billion won on the main board, providing the primary upward thrust for the index.

Foreign and institutional investors, meanwhile, net sold 158.2 billion won and 282.4 billion won, respectively. Foreign investors have now been net sellers for 12 consecutive trading sessions, though their net selling — which had surged to around 400 billion won early in the session — was tapering off.

Foreign investors have net sold approximately 150 trillion won worth of Kospi-listed securities this year, including exchange-traded funds, exchange-traded notes and equity-linked warrants. That compares with net selling of 2.95 trillion won for all of last year, roughly 50 times the annual figure.

Kosdaq fell 1.25 percent to 857.58 over the same period, with large-cap stocks including Alteogen, Ecopro BM and Ecopro all trading lower.

The won opened at 1,532.25 per dollar in the Seoul foreign exchange market Monday, weakening 6.65 won from the previous session's close. Starting Monday, the foreign exchange market will operate around the clock on weekdays.

Han Ji-young, an analyst at Kiwoom Securities, said the market's actual earnings expectations for Samsung Electronics may already exceed 85 trillion won in operating profit. "Given that both Samsung Electronics and SK hynix underperformed the broader Kospi last week amid concerns over AI demand, a relief rally after the earnings release — rather than a sell-on-the-news reaction — should be treated as the base scenario," Han said.

Lee Gyeong-min, an analyst at Daishin Securities, said uncertainty over the AI industry and semiconductor sector conditions that rattled markets last week would likely ease with Samsung Electronics' preliminary earnings release this week.