The share buybacks of Samsung Electronics and SK Hynix, which have been supporting downward pressure..

The share buybacks of Samsung Electronics and SK Hynix, which have been supporting downward pressure on the stock market, are expected to end as early as the middle of next month. It is about a month earlier than originally scheduled in November, and attention is being paid to whether there will be a supply and demand entity to support the KOSPI.

According to the Korea Exchange’s corporate disclosure channel on the 20th, Samsung Electronics purchased 39.8 million shares of its own shares for 20 trading days from the 24th of last month. The cumulative purchase amount is 10.3078 trillion won, accounting for 74.69% of the total planned purchase of 53.285,968 shares.

SK Hynix also bought 14.15 million shares of its own shares for 22 trading days from the 20th of last month. The cumulative purchase amount is 24.39 trillion won, accounting for 58.79% of the total 24.07 million shares. The combined total purchase of the two companies’ treasury stocks amounts to 34.69 trillion won.

Initially, Samsung Electronics was scheduled to buy back its own shares by Nov. 21 and SK Hynix by Nov. 19, but at the current pace, it is expected to close earlier.

Samsung Electronics buys about 2 million shares a day on average. Considering that the remaining volume is 13,485,968, the purchase can be completed in six to seven trading days. As SK Hynix is buying an average of 650,000 shares a day, it is expected to take 15 to 16 trading days to purchase the remaining 9.92 million shares. Considering the Chuseok holiday, National Foundation Day replacement holidays, and Hangul Day, both companies’ share buybacks are expected to end around the middle of next month.

Until now, large-scale treasury stock purchases by both companies have played a role in supporting the downside of the domestic stock market amid a series of unfavorable factors such as prolonged war, high interest rates, policy rate hikes in major countries, and theories of controlling the pace of artificial intelligence (AI) investment.

In fact, side cars have not been activated in the KOSPI market since the 20th of last month. Although the financial authorities’ regulations on single-stock leveraged exchange-traded funds (ETF) were also significant, analysts say that Samsung Electronics and SK Hynix’s share purchases defended the sharp decline in the index.

As the combined proportion of the two stocks in the KOSPI exceeds 50%, the stock purchase has a large impact on the index as well as individual stocks.

Lee Jung-bin, a researcher at Shinhan Investment & Securities, said, “We believe that the expansion of shareholder returns is a factor that complements the downside of stock prices,” adding, “In particular, non-financial stocks’ share buybacks showed relatively high performance and low downside beta in the face of market declines.”

The problem is after Samsung Electronics and SK Hynix’s share buybacks are over. As the KOSPI has recently been trapped in the box and transactions have plummeted, it is difficult to find a clear supplier other than other corporations following the purchase of treasury stocks.

The stock market is paying attention to whether foreign funds will return to the stock market. However, the investment environment for risky assets is still not easy, with Brent crude oil exceeding $100 per barrel and the 10-year U.S. Treasury bond interest rate approaching 5%. The won-dollar exchange rate has also recently risen again, exceeding 1,385 won.

On the other hand, if major companies such as semiconductors show solid performance in the third quarter earnings season, which starts next month, there is a possibility that foreign funds will flow back in.

Micron Technology, a “wind meter” in the semiconductor industry that will gauge Samsung Electronics and SK Hynix’s third-quarter performance, is scheduled after the Chuseok holiday. Additional shareholder return measures by both companies are also of interest.

Lee Jae-won, a researcher at Yuanta Securities, said, “Samsung Electronics is scheduled to pay about 30 trillion won in cash dividends in the third quarter, and SK Hynix has also announced the disclosure of additional shareholder return policies following 40 trillion won worth of treasury stock purchases and incineration,” adding, “It is time to prepare for Samsung Electronics’ provisional performance in early October.”