Shares of Samsung Electronics and SK Hynix surged by more than 8% on Friday following reports that Singapore’s Temasek Holdings plans to invest directly in the two semiconductor firms through its internal investment team [1, 2, 3]. The rally drove the benchmark Kospi index up by as much as 5.1% on the day [1, 2, 3].
The chipmakers had faced a brutal sell-off in July amid doubts about the pace of AI infrastructure buildout, which triggered unwinding of leveraged positions [1, 2, 3]. At present, Samsung Electronics and SK Hynix are trading at forward price-to-earnings ratios of 4.2 and 3.6 times respectively, significantly lower than the more than 21 times multiple seen in the Philadelphia Semiconductor Index of global peers [1, 2, 3].
Global funds added over 2 trillion won (about US$1.4 billion) worth of Kospi shares as of mid-week on August 10, reflecting renewed foreign interest in South Korean stocks [1, 2, 3]. Temasek did not immediately respond to requests for comment on the investment report [1, 2, 3].
SK Hynix announced on August 7 that it will disclose details of its shareholder-return plans in the third quarter, signaling a potential return of capital to investors [1, 2, 3]. Analysts at KB Securities expect Samsung Electronics to follow with a more than tenfold increase in shareholder returns [1, 2, 3].
Experts see Temasek’s reported investment as a sign of growing foreign confidence in South Korea’s AI and memory chip cycle. Ha SeokKeun, chief investment officer of Eugene Asset Management, said, "If confirmed, the investment would signal strong foreign confidence in South Korea’s AI/memory cycle. It would be one of the drivers supporting a Kospi rebound" [1]. Homin Lee, senior macro strategist at Lombard Odier Singapore Ltd, added, "This hints at long-term investors’ improving appetite for South Korea’s deeply-undervalued semiconductor sector. More aggressive foreign institutions are likely to view these key names as an opportunity, especially if retail-driven volatility subsides" [1].
The companies and Temasek have yet to confirm formal details, with Temasek remaining silent on the reports as of Friday [1, 2, 3]. SK Hynix is scheduled to unveil its third-quarter shareholder-return details soon, offering a clearer picture of capital distribution plans [2, 3].
