Samsung Electronics and SK Hynix showed strength of around 4% in pre-market trading, raising the likelihood of the KOSPI breaking back above the 7,000 level this week. A rally in U.S. semiconductor stocks and expectations for expanding AI computing demand lifted investor sentiment, while global investment banks issued analyses suggesting the two stocks are in a state of extreme undervaluation.

As of 8:06 a.m. on the 7th, South Korea’s Samsung Electronics (005930.KS) was trading at ₩265,500 (approximately $200), up 3.91% from the previous session on the Nextrade pre-market. South Korea’s SK Hynix (000660.KS) rose 4.25% to ₩1.717 million (approximately $1,300). Buying flowed across the semiconductor value chain, with SK Square up 3.36% and Samsung Electro-Mechanics up 2.43%.

Large-cap stocks were also broadly higher. Hanmi Semiconductor (042700.KS) gained 2.61%, South Korea’s LG Electronics (066570.KS) rose 3.47%, while Hyundai Steel (004020.KS) and BH (090460.KS) climbed 5.08% and 4.81% respectively. Iljin Hysolus (271940.KS) surged 17.63%. Across the pre-market, 551 stocks traded with an average gain of 2.56% from reference prices.

The direct catalyst for this strength was the Philadelphia Semiconductor Index’s 3.38% gain on the 4th in New York trading. This stood in sharp contrast to declines across the Dow Jones Industrial Average (-0.51%), S&P 500 (-0.38%), and Nasdaq (-0.29%). U.S. August nonfarm payrolls came in well above market expectations, reigniting rate hike concerns, but semiconductor stocks offset the pressure.

The catalyst for the semiconductor rally was OpenAI’s unveiling of its next-generation model, GPT-6 Astra. Jensen Huang, CEO of Nvidia, wrote on his X account: “GPT-6 Astra was trained on over 100,000 Nvidia Grace Blackwell NVLink72 systems,” adding that “AGI has arrived.” He continued, “Next, 400,000 GPUs will be brought online.” The expectation that AI computing infrastructure investment will expand further has boosted the semiconductor demand outlook.

Nomura: “Extreme Undervaluation” — Maintains Targets of ₩670,000 and ₩4.7 Million

Nomura Securities maintained its buy ratings on Samsung Electronics and SK Hynix in a report released on the 4th, keeping target prices at ₩670,000 (approximately $500) and ₩4.7 million (approximately $3,500) respectively. These targets are more than double the closing prices on the 4th (Samsung Electronics at ₩255,000, SK Hynix at ₩1.647 million).

Nomura assessed that the two companies’ share prices have fallen more than 30% and 40% from their peaks respectively, bringing valuations down to an average of 3 times forward 2027 price-to-earnings ratios. The firm argued that this is a structural boom period: demand is surging due to expanded AI investment while supply shortages are intensifying, requiring global production capacity to double within four years and triple within six years. Big Tech customers are signing five-year long-term contracts with prepayments of 20-30%, providing earnings stability.

Share buybacks were also cited as a factor supporting the downside. According to Shinhan Investment Securities, the two companies’ additional buyback capacity is approximately ₩38.3 trillion (approximately $28.5 billion), enough to deploy defensive buying for 24 trading days at an average daily pace of ₩1.6 trillion (approximately $1.2 billion).

The exchange rate is a short-term variable. Nomura analyzed that a 10% appreciation in the Korean won could reduce operating profit by approximately 12%. Citigroup also lowered its target prices for SK Hynix and Samsung Electronics to ₩3 million (approximately $2,200) and ₩430,000 (approximately $320) respectively, reflecting currency headwinds, but maintained that the industry upturn itself remains intact.

This Week’s Watershed: CPI and Treasury Yields

Kiwoom Securities set this week’s expected KOSPI range at 6,400-7,050 points. Han Ji-young, an analyst at Kiwoom Securities, said: “As last Friday’s U.S. semiconductor rally suggests, the persistent selling pressure on domestic and international semiconductor stocks is likely being exhausted.”

He explained that “it is appropriate to set a base case where the stock market’s recovery momentum strengthens compared to last week as it digests Oracle’s earnings and U.S. August CPI.”

This week’s schedule is packed. On the 9th, the U.S. Treasury Department is scheduled to expand its long-term Treasury buyback program (from $2 billion to $4 billion per operation). With the U.S. 10-year Treasury yield having surged to 4.8%, its highest level since the start of the year amid Middle East tensions and spiking oil prices, the expanded buyback could serve as a catalyst for rate stabilization.

The U.S. August CPI release on the 11th is the biggest variable. If inflation deceleration is confirmed at the market estimate of 3.4%, expectations for a Federal Reserve rate hold in September would likely serve as a catalyst for index rebounds. Earnings from U.S. technology companies including Oracle and Adobe will also provide material for gauging the AI investment cycle and tech stock sentiment.

However, investors should be wary of supply-demand volatility around the 10th, when KOSPI 200 futures and options expire simultaneously — the so-called “quadruple witching day.” Given the decline in open interest and options hedge unwinding, intraday swings could widen. Caution on short-term volatility is warranted until key indicators are confirmed later in the week.