Kospi falls below 6,700 on Samsung Electronics shareholder return disappointment; Kosdaq recovers 810

Growing disappointment over Samsung Electronics' shareholder return policy pushed the Kospi below the 6,700 level Monday. Samsung Electronics plunged more than 8 percent, dragging the index lower amid simultaneous net selling by foreign and institutional investors. The Kosdaq, by contrast, rose more than 1 percent on the back of foreign and institutional buying, with the two markets moving in opposite directions.

According to Korea Exchange, the Kospi closed down 215.99 points, or 3.12 percent, at 6,696.96. The index opened down 31.88 points, or 0.46 percent, at 6,881.07 before extending its losses.

On the main board, foreign investors and institutions posted net selling of 3.68 trillion won ($2.66 billion) and 1.29 trillion won, respectively. Retail investors were net buyers of 3.32 trillion won.

Samsung Electronics led the index's decline, closing down 24,500 won, or 8.70 percent, at 257,000 won. SK Hynix also fell 59,000 won, or 3.41 percent, to 1.67 million won.

The moves were attributed to Samsung Electronics' shareholder return policy, announced after the close of regular trading Friday, falling short of the market's elevated expectations. Samsung Electronics said it plans to return roughly 90 trillion to 110 trillion won to shareholders this year, including about 30 trillion won in cash dividends — covering the regular third-quarter dividend — to be paid out first.

The maximum return of 110 trillion won would be roughly five times the 20.3 trillion won Samsung Electronics announced in 2020, which was at the time the largest shareholder return in the company's history. It also far exceeds the 40 trillion won return plan announced earlier by SK Hynix.

However, analysts noted that the figure fell short of market expectations, as some in the brokerage community had floated the possibility of a return of up to 200 trillion won. The absence of a concrete share buyback and cancellation plan — excluding shares earmarked for employee compensation — also weighed on investor sentiment.

"Samsung Electronics' share price had recently priced in expectations that this year's shareholder return could expand to around 140 trillion won, but the actual figure announced was 90 trillion to 110 trillion won — as much as 30 trillion to 50 trillion won below the upper end of market expectations," said Choi Bo-young, an analyst at Kyobo Securities. "While the absolute size is the largest ever, it fell short of the aggressive share buyback and cancellation expansion the market had hoped for, making it difficult to call this a surprise return."

The fact that Samsung Electronics left its existing shareholder return criteria unchanged — unlike SK Hynix — also weighed on the stock. SK Hynix expanded its cumulative free cash flow-based return ratio for 2025 to 2027 from "within 50 percent" to "50 percent or more," while Samsung Electronics maintained its existing policy of returning 50 percent of cumulative free cash flow for 2024 to 2026.

Some analysts also noted a profit-taking element in Monday's decline, given that Samsung Electronics' share price had already priced in expectations of an expanded shareholder return. "SK Hynix's announcement of a share buyback and cancellation had lifted Samsung Electronics' share price over the past two weeks on expectations of a similar move," said Lee Sang-heon, an analyst at iM Securities. "Monday's decline has the character of profit-taking."

Some analysts cautioned against reading Monday's sharp Kospi drop as a sign of broad market weakness. "Advancing stocks numbered 579, outpacing the 286 that declined, so I interpret this as an index correction driven by the fall in Samsung affiliates rather than broad market weakness," said Lee Gyeong-min, an analyst at Daishin Securities.

Among large-cap stocks, Samsung Electronics preferred shares (-8.55 percent), SK Square (-4.19 percent), Hyundai Motor (-0.24 percent), Samsung C&T (-7.84 percent) and KB Financial Group (-0.73 percent) all fell. Samsung Electro-Mechanics (+0.15 percent), LG Energy Solution (+5.39 percent) and Samsung Biologics (+1.42 percent) rose.

Buying flows rotating out of semiconductors into other sectors produced divergence across industries. Secondary battery stocks rallied in unison, driven by ESS momentum and bargain hunting — L&F surged 16.34 percent, Posco Future M gained 10.33 percent, Samsung SDI rose 7.74 percent and LG Energy Solution advanced 5.39 percent.

Pharmaceutical and biotech stocks also posted strong gains. Hanmi Pharm surged 29.96 percent after announcing a technology licensing deal with US-based Genentech worth 3.2 trillion won, while Hanmi Science jumped 25.70 percent. Green Cross (+6.72 percent) and Hanall Biopharma (+5.84 percent) also rose.

The Kosdaq closed up 11.39 points, or 1.42 percent, at 813.33. The index opened up 2.33 points, or 0.29 percent, at 804.27 and at one point during the session climbed as high as 821.96, up 20.02 points, or 2.50 percent.

On the Kosdaq, foreign investors and institutions were net buyers of 241.7 billion won and 24.9 billion won, respectively. Retail investors posted net selling of 260.4 billion won.

Among Kosdaq large-cap stocks, Alteogen (+0.16 percent), Ecopro (+7.59 percent), Ecopro BM (+10.80 percent) and PharmaResearch (+3.87 percent) rose. Rainbow Robotics (-2.09 percent), Jusung Engineering (-1.54 percent), Wonik IPS (-1.39 percent), HLB (-2.07 percent), Leeno Industrial (-1.67 percent) and EO Technics (-4.08 percent) fell.

"As pressure from long-term interest rates eased, a rebound emerged in the domestic market, centered on sectors and stocks that had seen excessive recent declines," Lee said. "With weakness concentrated in semiconductors, sector rotation into other industries produced a divergent, sector-differentiated market."