Samsung Elec, SK hynix shares hammered amid harbinger for DRAM downturn

Aug 20, 2021

Jittery prospects for memory market beyond the third quarter triggered weeklong massive foreign selloff, pushing shares of the world’s two largest memory makers Samsung Electronics Co. and SK hynix Inc. to fresh annual lows.

Samsung Electronics lost 3.51 percent to 74,300 won ($63.6) in Friday afternoon trading, sinking below 75,000 won for the first time since December last year despite the positive news of its chief Jay Y. Lee out of jail after a seven-month void in leadership. The stock retreated 7.33 percent over the previous six sessions.

No. 2 DRAM maker SK hynix is trading down 0.5 percent at 100,000 won, eased from a 4.74 percent fall on the previous day but continuing its slide for the seven days straight.

Their losses weighed on the broader Kospi, pushing it down 1.6 percent at 3157.17 as of 12:38 p.m. on Friday.

Shares of the bellwether chip names tanked as foreigners offloaded 3.56 worth of Samsung Electronics shares and 1.84 trillion won worth of SK hynix stock over the last six consecutive days, erasing more than 66 trillion won in market cap from the companies.

Foreign selling spree was triggered by downgrades by brokerages and market trackers at home and abroad on stock and industry prospects forecasting faster-than-expected arrival of DRAM memory downturn.

Global brokerage CLSA lowered its target price for Samsung Electronics to 86,000 won from 110,000 won and for SK hynix to 123,000 won from 172,000 won on Monday.

Morgan Stanley cut down Samsung Electronics’s target price to 89,000 won from 98,000 won and halved SK hynix’s target price to 80,000 won from 156,000 won, downgrading the company by two notches from ‘overweight’ to ‘underweight.’ It also reduced its outlook on the South Korean tech industry from ‘in-line’ to ‘cautious,’ warning of a difficult pricing environment in the memory sector heading into next year.

Local brokerage Hana Financial Investment followed suit by slashing its forecast for SK hynix’s earnings next year from 14.4 trillion won to 10.8 trillion won with a target price cut from 165,000 won to 130,000 won.

Goldman Sachs, however, remained positive on the Korean memory sector despite DRAM pricing concerns, maintaining a buy rating on Samsung Electronics and SK hynix with target prices unchanged at 107,000 won and 177,000 won, respectively.

Source: Pulse