Kospi's fate hinges on Samsung, SK hynix shareholder returns this week

All eyes are on whether Samsung Electronics and SK hynix will unveil sweeping shareholder-return measures when they report final third-quarter earnings this week. Persistent concerns over an AI demand slowdown have sent both companies' share prices sharply lower from their peaks, and foreign investors have net-sold the two stocks by more than 180 trillion won ($136 billion) so far this year.

Samsung Electronics is scheduled to release its final third-quarter results on Thursday, while SK hynix will do so on Wednesday, according to industry sources.

Samsung Electronics earlier reported a preliminary operating profit of 107.4 trillion won for the quarter, and securities analysts estimate SK hynix's operating profit will exceed 75 trillion won. Both companies are on track for record earnings, yet their share prices have continued to slide.

Since their June peaks, Samsung Electronics shares have fallen from the 360,000 won range to the 210,000 won range, while SK hynix has dropped from around 2.91 million won to around 1.27 million won. Samsung Electronics closed Monday down 1.16 percent at 213,000 won, and SK hynix fell 0.16 percent to 1.275 million won.

Analysts attribute the recent decline largely to fears that credit risks originating at neocloud provider CoreWeave could spread to major technology companies.

Foreign investors have been selling the two stocks at a record pace. From the start of this year through Monday, SK hynix was the most net-sold stock by foreign investors on the Kospi, with net selling reaching 92.77 trillion won. Samsung Electronics was second, with net selling of 88.4 trillion won.

The supply-demand gap has widened further as buyback programs at both Samsung Electronics and SK hynix — which had helped prop up the market — came to an end. Against that backdrop, market expectations are growing that the earnings announcements will be accompanied by additional shareholder-return plans.

Samsung Electronics announced in August a shareholder-return program worth 90 trillion to 110 trillion won for this year. Under that plan, the company intends to pay out 30 trillion won in cash dividends, including regular quarterly dividends for the third quarter, with the specifics to be confirmed at this week's earnings release.

The remaining shareholder returns — covering cash dividends and the scale and method of buybacks and cancellations — will be determined in January next year once full-year results are finalized. With the 2024–2026 three-year shareholder-return cycle concluding this year, a new policy to take effect from next year could also be unveiled.

Kim Dong-won, head of research at KB Securities, wrote in a report that if the remaining funds under the three-year program are assumed to total 110 trillion won, the company could return 70 trillion to 80 trillion won in cash dividends and cancel 30 trillion to 40 trillion won worth of treasury shares.

Kim added that the next shareholder-return policy could exceed the existing benchmark of returning 50 percent of free cash flow, and that even if the company maintained the same 50 percent threshold, the total shareholder-return amount would be more than four times larger than before.

SK hynix also disclosed a new shareholder-return policy in August, announcing a plan to acquire and cancel 40 trillion won worth of its own shares and to return more than 50 percent of cumulative free cash flow over the next three years.

In light of that policy, the market is now speculating that a special dividend and an additional buyback plan could be announced alongside this week's earnings results.

Specifically, sources said the company is pursuing a plan to use a portion of the gains from selling its stake in Japanese NAND flash maker Kioxia as funding, in line with a management strategy of sharing investment returns with shareholders. Industry estimates put the pretax gain from the Kioxia stake sale at more than 20 trillion won — nearly 10 times the total dividends of 2.1 trillion won paid last year.

SK hynix said it is reviewing various shareholder-return options to enhance shareholder value but that nothing has been finalized. The company said any additional measures will go through board approval and be announced at the third-quarter earnings release on Wednesday.

Han Dong-hee, an analyst at SK Securities, projected that if SK hynix's 2026–2028 shareholder-return policy — which calls for returning more than 50 percent of cumulative free cash flow — is applied, the total return as a share of current market capitalization could approach 11 percent in 2027 and 14 percent in 2028.

SK hynix's recent decision to halt its review of a listing for US subsidiary Solidigm is also seen as reflecting the company's commitment to enhancing shareholder value.

Kim Sun-woo, an analyst at Meritz Securities, said there is a high likelihood that this week's earnings call will feature enhanced shareholder-return measures exceeding current market expectations, adding that the withdrawal of the Solidigm initial public offering would have further underscored the importance of shareholder-return policies that benefit existing shareholders directly.