Samsung Hits Record $80B Profit, KOSPI Slides 2.6% Anyway

Samsung guided a record KRW 107.4T Q3 profit, yet KOSPI fell 2.6% on foreign selling. Plus Fed minutes, 5.3% yields, $100 oil and Michael Burry on Anthropic.

TLDR

• Samsung guided Q3 operating profit to a record KRW 107.4 trillion (about $80.2 billion), up 783% from a year ago, the first time any tech company has crossed KRW 100 trillion in a single quarter.
• KOSPI still fell 2.62% to 6,625.93, its third straight losing session, as foreign investors sold about KRW 1.99 trillion of Korean shares. Samsung closed down 2.42%.
• Fed minutes showed every official backed September’s hike to 3.75% to 4%, and most expect one more before year end. The US 10 year yield touched its highest level since 2002.
• Wall Street slipped from record highs on Wednesday. The S&P 500 fell 0.22% and the Dow dropped 341 points, while Brent crude held above $100.
• Michael Burry called Anthropic’s pre-IPO valuation a bubble, and the WSJ reported Broadcom is seeking more than $50 billion in financing for OpenAI’s custom AI chip.

Market Regime

Markets are in a rates first regime. The US 10 year Treasury yield traded near 5.29% on Wednesday after briefly touching about 5.36%, its highest level since 2002. When the safest bond in the world pays that much, investors demand more from stocks, and they pull money from places that already ran hard. Korea, after a historic memory chip rally, is one of those places.

That is why a record profit from Samsung could not stop the slide. The earnings are real, but so is the cost of money, and foreign funds are choosing to lock in gains. What could change the setup is a softer US inflation print on October 14, or a drop in oil from above $100. Until then, good news on company earnings is being outweighed by bad news on rates.

Bullish Factors

• Record memory profits. Samsung expects Q3 operating profit of KRW 107.4 trillion and revenue of KRW 195 trillion, up 127% from a year ago, as AI drives record demand for memory chips.
• The US shopper is still spending. Costco reported September sales of $30.02 billion, up 13% from last year. Comparable sales rose 11.4%, or 7.6% excluding gas prices and currency, and digital sales grew 19%.
• AI spending keeps climbing. Broadcom is seeking more than $50 billion to fund the custom AI chip it is building with OpenAI, with Apollo and Blackstone among the lenders in talks. Demand for AI hardware is still growing.
• Prices are well below recent highs. KOSPI is now about 25% below its peak and Samsung shares are about 28% below their high, even as earnings hit new records.

Bearish Factors

• Money is leaving Korea. Foreign investors sold about KRW 1.99 trillion of Korean shares on Thursday and institutions sold another KRW 1.67 trillion.
• The Fed is not done. September minutes show most Fed officials expect another hike this year. Markets price roughly a 20% chance it comes at the October 28 meeting.
• Bond yields at a 24 year high. The 10 year yield near 5.3% raises borrowing costs for companies and makes stocks look expensive next to bonds.
• Oil above $100. Brent crude is above $100 as tanker attacks near the Strait of Hormuz and a storm in the Gulf of Mexico threaten supply. Higher fuel prices feed inflation.
• AI valuation doubts. Michael Burry says Anthropic’s pre-IPO valuation could buy 78 profitable S&P 500 companies, adding to questions about how much private AI names are worth.

Asian Markets This Morning

Korea led the losses in Asia. KOSPI closed at 6,625.93, down 2.62%, after opening slightly higher on Samsung’s numbers. KOSDAQ fell 0.69% to 892.27 and the won was little changed at about 1,340.7 per dollar.

• Samsung Electronics fell 2.42% to KRW 262,000. SK Hynix fell 2.44% to KRW 1,681,000. Both moved with the broader sell off rather than on their own news.
• Local reports also pointed to possible chip fund rebalancing flagged by Goldman Sachs, options expiry and the end of Samsung’s share buyback as short term pressures.
• Japan’s Nikkei 225 slipped below 70,000, down about 0.7%, as high bond yields and a firmer yen weighed on machinery makers and trading houses.
• Mainland China resumed onshore trading after the Golden Week break, giving investors their first read on Chinese markets in over a week.

What Moved Wall Street Today

US stocks pulled back from record highs on Wednesday as bond yields climbed and the Fed minutes confirmed one more hike is likely. More than two thirds of US stocks fell.

• S&P 500 closed at 7,801.77, down 0.22%. Nasdaq closed at 27,538.69, also down 0.22%.
• The Dow fell 341 points, or 0.66%, to 51,179.87. The Russell 2000 dropped 1.31% to 2,793.36, as smaller companies feel higher borrowing costs the most.
• The minutes, released at 11:30 PM IST, showed every official supported September’s hike. The open question is whether the next one comes on October 28 or December 9.
• Skyworks rose 3.39% as its $22 billion merger with Qorvo moves closer to completion. Comfort Systems lost 5.91% after a downgrade.
• After the bell, the WSJ reported Broadcom’s financing talks for OpenAI’s chip. The money is meant to help Oracle pay for hardware before its cloud revenue starts coming in.

Assets in Focus

KOSPI

The index has now fallen for three straight sessions and closed at 6,625.93, about 25% below its peak. The story is not earnings, which are at records, but who is selling. Foreign funds have been taking profits as US yields rise. A fourth straight drop on Friday would extend the trend. A steadier session would suggest the selling is easing.

SKHY (SK Hynix)

SK Hynix is the other Korean memory giant and makes the high bandwidth memory used in AI chips. Samsung’s guide confirms memory prices and demand are at record levels, which is good for SK Hynix too. But its shares fell 2.44% in Seoul on Thursday with the rest of Korea, so the flow story is beating the earnings story for now.

DRAM (Semiconductor Index)

The DRAM index gives exposure to the memory chip cycle in one position. Samsung’s revenue jump of 127% shows how strong demand is. The risk is that investors already priced much of this in, which is what Korea’s reaction suggests.

NSDQ100

Tech stocks are the most sensitive to higher rates because much of their value sits in future earnings. With the Fed leaning towards another hike and the 10 year yield near 5.3%, NSDQ100 is in a holding pattern. US CPI on October 14 at 6:00 PM IST is the next big test.

Anthropic Pre-IPO

Michael Burry says Anthropic’s pre-IPO valuation is a bubble, comparing it to the combined value of 78 profitable S&P 500 companies, including Domino’s, Clorox, lululemon and FedEx Freight. He has argued since mid year that the largest private AI companies are priced too high. On the other side, AI spending keeps growing, as the Broadcom financing shows. Anthropic trades on CoinDCX Global Futures as a Pre-IPO Perp, so traders can follow this debate before any listing. Expect sharp moves on headlines in both directions.

Index Levels to Watch

• KOSPI: Closed at 6,625.93. The 6,500 zone is the next round number below. On the upside, 6,880 is where this week’s slide picked up speed.
• S&P 500: Closed at 7,801.77. Tuesday’s record close near 7,819 is the level above. The 7,750 zone is the nearest reference below.
• Nasdaq: Closed at 27,538.69. Tuesday’s close near 27,600 is the level above, with 27,400 as a reference below.
• Nikkei 225: Trading just under 70,000. Holding near 69,000 keeps the recent range intact, while a move back above 70,000 would ease pressure.

Disclaimer

This content is for informational and educational purposes only and does not constitute financial, investment, trading, or any other form of advice. Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. CoinDCX Global Futures is a registered platform for the trading of US Stock Futures. Reference points mentioned in this article are contextual only and not entry or exit signals. For any queries, visit support.coindcx.com.

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