KOSPI surges 5.9% as chipmakers rally on shareholder returns

SK Hynix, a South Korean semiconductor company, announced a 40 trillion won (€25 billion) share buyback program to boost market valuation. The company plans to repurchase and cancel 24.1 million shares, citing undervaluation despite strong cash flow and growth prospects. The move follows a recent 10% share price drop amid market volatility. SK Hynix also raised its target for shareholder returns to over 50% of cumulative free cash flow.

SK Hynix and Samsung Electronics led the Kospi's 5.9% surge after announcing significant shareholder returns. SK Hynix unveiled a 40 trillion won ($28.9 billion) buyback plan, jumping 12.7% in a day. Analysts estimate further returns of 181.5-211 trillion won. Samsung plans a 150 trillion won program. Both companies benefit from AI-driven cash generation.

Gold prices rose nearly 4% to $4,500 after the US Treasury announced it would double buybacks of longer-dated Treasuries, suppressing yields and weakening the US dollar. The move signaled government intervention to control bond markets, which could lead to a weaker dollar and potentially higher interest rates. The Fed's stance on inflation and rate hikes remains uncertain. Bitcoin and crypto-related stocks also saw gains.

SK Hynix and Samsung announced large shareholder return plans, with SK Hynix approving a $28.6B buyback and Samsung preparing a $72B return package. Micron, despite strong cash generation, has not followed suit, with minimal capital return. Micron's financials show significant cash reserves and flexibility, but structural differences and cyclical caution may delay any major shareholder returns.

Samsung plans to return 100 trillion won ($71.75 billion) to shareholders, pending board approval, signaling confidence in AI-driven memory demand. The payout includes a special dividend and follows record quarterly earnings of 171.5 trillion won in revenue and 89.5 trillion won in operating profit. SK Hynix announced a 40 trillion won buyback program, the largest in South Korea. TrendForce projects significant price increases for DRAM and NAND flash memory.

SK Hynix shares rose 11% after announcing a $28.7B share buyback and cancellation plan, representing 3.3% of its total shares. The company cited undervaluation and strong cash position. It also raised its shareholder return target to over 50% of free cash flow for 2025-2027.