#每周来晒 #South Korean stocks plunge—would you buy the dip?

The market is gripped by panic today, but I would rather look beyond short-term volatility and discuss the broader logic of memory chips.

South Korea's stock market roller coaster this year is essentially a microcosm of the memory chip cycle. The KOSPI rose 100% in the first half, leading global markets, driven by the explosive demand for AI computing power, which pushed memory chips into a supercycle. HBM (high-bandwidth memory) is in short supply, DRAM and NAND prices have surged, and Samsung and SK hynix have profited handsomely.

The current pullback is valuation digestion, not the end of the cycle.

Several long-term drivers remain unchanged:

1. AI computing demand is still accelerating. Goldman Sachs expects South Korean corporate earnings to achieve 300% growth in 2026, particularly highlighting a “record supply shortfall” in key chips for AI servers and data centers.

2. The next wave of growth brought by HBM4 has not yet been priced in. KB Securities expects Samsung's HBM selling prices in 2027 to rise by more than 100% from this year, with HBM4's share of HBM revenue expanding from 40% this year to 80% next year. This is a tangible earnings boost.

3. Samsung's balance sheet is exceptionally healthy. Its debt-to-asset ratio is just 0.04, its interest coverage ratio is as high as 236 times, and its ROE has reached 30.79%. This financial position means the company has sufficient strength to weather the cycle.

4. Corporate governance reform is a long-term catalyst. The South Korean government's policies to enhance corporate value are attracting more attention from domestic and overseas funds to the South Korean market. JPMorgan believes this “remains an important foundation for the overall re-rating of the South Korean market.”

My strategy: Use a regular-investment approach and avoid betting on one-day price movements. Buy a fixed amount of Samsung Electronics and SK hynix every week, ignoring short-term volatility. The AI narrative for memory chips has at least another two to three years of favorable conditions ahead, and the current plunge is simply offering long-term investors better entry prices.

The real risk is not buying during a plunge, but waiting until the market recovers and then regretting not having bought. Of course, the prerequisite is that you can withstand the psychological pressure of a further 20% short-term decline.