Macquarie: KOSPI index expected to rebound in the short term, driven by Samsung and SK Hynix.

Macquarie analysts stated in a report that South Korea’s benchmark Kospi index is expected to rebound in the short term, driven by chipmakers Samsung Electronics and SK Hynix. The analysts noted that extreme volatility in July was mainly fueled by these two stocks, which together accounted for 71% of the total market capitalization loss. However, as outflows of foreign and institutional funds stabilize, concentrated position funds reallocate, and margin trading balances remain at a reasonable level, market volatility is easing, with limited risk of sudden sharp swings. Macquarie expects earnings revisions to push the Kospi higher, adding that Samsung Electronics and SK Hynix will overcome concerns over peak demand and competition. The two firms’ rapid profit growth should translate into substantial returns for shareholders, they noted. Macquarie maintained its 8,000-point target for the Kospi. (Source: Jinshi)