Goldman Sachs “Samsung Electronics, volatility increased on the 8th… selling factors overlap”

Global investment bank (IB) Goldman Sachs predicted that stock price volatility may increase as variables such as exchange-traded fund (ETF) rebalancing, option expiration, and end of share repurchase overlap on the 8th, the date of Samsung Electronics' [005930] third quarter provisional earnings announcement.

According to the 'Samsung Electronics, Things to Pay Attention Ahead of October 8th' report published by Goldman Sachs FICC and Stock Division on the 6th, several supply and demand events are scheduled to occur simultaneously for Samsung Electronics on the 8th.

First, seven types of semiconductor ETFs with total assets under management (AUM) of approximately 19 trillion won will begin rebalancing on the same day.

Goldman Sachs reported that as the proportion of Samsung Electronics included in the ETF approaches the upper limit, the market expects that mechanical sales will occur for Samsung Electronics during the rebalancing process.

On the other hand, it was believed that some of the funds flowing out of Samsung Electronics were likely to flow into semiconductor stocks such as SK Hynix [000660], SK Square [402340], Isu Petasys [007660], Wonik IPS [240810], and Hanmi Semiconductor [042700].

With the options expiring on the same day, it was believed that the effect of the share buyback, which had supported Samsung Electronics' stock price, was likely to weaken.

Goldman Sachs predicted that Samsung Electronics' share purchase worth 15 trillion won will be completed on the 6th.

Performance expectations have also been lowered due to the strong won.

Goldman Sachs lowered Samsung Electronics' third quarter operating profit forecast by about 5% from 112 trillion won to 106 trillion won, reflecting the fact that the average won/dollar exchange rate in the third quarter was 1,418 won, which was below the previous assumption of 1,460 won.

The market consensus (forecast) for Samsung Electronics' operating profit in the third quarter is also at 105.5 trillion won, down from the high of about 114 trillion won last August.

However, the semiconductor industry itself was evaluated as solid.

Goldman Sachs believes that while the fundamentals of DRAM and NAND are good, the growth of high bandwidth memory (HBM) will be particularly noticeable.

As HBM4 shipments begin in earnest, HBM bit growth (bit unit shipment growth rate) is expected to increase by about 50% compared to the previous quarter.

Recently, continuous selling by foreigners was also cited as a factor that could increase short-term volatility.

Foreigners have been net sellers of Samsung Electronics for the past five consecutive trading days, selling a total of $2.6 billion worth.

Looking at supply and demand from the 1st of last month to the 2nd of this month, individual investors net sold $7.5 billion, foreigners net sold $3.4 billion, and pension funds net sold $300 million. On the other hand, during the same period, share repurchases had a net purchase effect of $8.5 billion, and domestic institutions had a net purchase effect of $2.5 billion.

Accordingly, Goldman Sachs pointed out that the key viewpoint for future stock prices is whether foreign buying will return as Samsung Electronics' announcement of provisional earnings coincides with mechanical selling, option expiration, and the end of share repurchases due to ETF rebalancing.