After the sharp drop in South Korean stocks, many people have been asking whether this is a buying opportunity. I want to highlight a key judgment from Morgan Stanley’s latest research report: weakness in memory stocks’ share prices may lead earnings peaks by 4 to 8 months.

What does this mean? Samsung and SK hynix’s quarterly profits are indeed still hitting records, but share prices trade on expectations, not the past. Morgan Stanley strategist Shawn Kim explicitly noted that the market is pricing in “slower price increases, a slowdown in earnings upgrades, and increased future supply.” Even if current-period profits remain impressive, share prices may adjust first.

Look at the data: SK hynix’s average DRAM chip selling price rose approximately 30% quarter-on-quarter in the second quarter, significantly narrowing from the roughly 65% increase in the first quarter; the average price increase for NAND flash also narrowed from 75% to 55%. The momentum behind price increases is weakening at the margin.

The supply side also warrants caution. Samsung expects supply constraints in 2027 to be more severe than in 2026, but high profits will inevitably stimulate capacity expansion. More importantly, the brutal sell-off triggered by highly leveraged trading this summer has already made some global funds hesitant to return to the South Korean market.

In its semiconductor allocation ranking, Morgan Stanley placed memory chips in the “third tier,” behind GPUs and networking chips, and explicitly recommended “selective stock picking” in memory rather than broadly increasing exposure.

This round of declines in South Korean stocks is not simply a case of “they have fallen enough, so it is time to buy.” The cyclical pattern of memory stocks may be coming into play—the period when earnings are being realized may actually be a danger zone for share prices. I will wait until the signal of slowing earnings upgrades becomes clearer before considering an entry.
#每周来晒