The Kospi Composite Index pulled back on Thursday, sliding to 5,861 points and giving back some of the gains from earlier this week when investors cheered SK Hynix's robust earnings. The index remains about 37% below its yearly high, reflecting persistent caution in the South Korean market.
Mixed earnings from tech giants
This week brought a mix of results from the index's heavyweights. SK Hynix, the second-largest constituent, reported a surge in third-quarter revenue and announced a $45 billion capital return program, with management forecasting the memory chip boom to extend through 2029. That news helped lift the index earlier.
Samsung Electronics, the largest component, posted revenue of 195.25 trillion won (approximately $124 billion), slightly missing analyst expectations. Its operating profit of 107.44 trillion won was in line with forecasts. The company declared 30 trillion won in cash dividends for the third quarter and plans to return an additional 55 trillion to 75 trillion won. Despite this, Samsung's stock fell 5%.
Google's results fuel AI jitters
The primary drag on the Kospi today was Alphabet's earnings, which came in weaker than expected. Revenue reached $111.2 billion, slightly below consensus, while advertising revenue of $82 billion missed the $83.6 billion estimate. These figures have intensified concerns about the massive capital expenditures tech firms are pouring into artificial intelligence.
Investors are increasingly worried about the sustainability of the AI boom. Prominent figures like Ken Griffin and Ray Dalio have warned of a potential bubble. Elon Musk recently predicted that many neocloud companies could fail due to financial market challenges, and data shows CoreWeave's bond yields have spiked to 15%.
Because Samsung and SK Hynix together account for roughly half of the Kospi's weighting, a significant downturn in AI-related sentiment would heavily impact the index. However, some analysts remain optimistic, arguing that the AI expansion still has room to grow and that these companies are undervalued.
Technical outlook
From a technical perspective, the Kospi found support at 5,272 points in July and again in October, bouncing after SK Hynix's earnings. Yet the index remains below its 50-day moving average, and the Supertrend indicator is still bearish. This suggests near-term pressure could persist, with a potential drop toward the 5,500 level. Alternatively, a continued rally might target the 50-day moving average at 6,400 points.
This article is for informational purposes only and does not constitute financial advice.
