On the 30th, the US stock market fell due to weakness in technology stocks ahead of the Fed’s Federal Open Market Committee (FOMC) regular meeting scheduled this week. Semiconductor and automobile companies such as Tesla (-6%), GM (-4%), Nvidia (-6%), and AMD (-4%) led the plunge. As a result, the domestic stock market is expected to start down on the 31st. Attention is focusing on what position Samsung Electronics, which will release its final results for the fourth quarter on this day, will make on whether or not to cut production.
■ Pay attention to Samsung Electronics production cuts
Samsung Electronics will announce final results for the fourth quarter of last year on the 31st. In particular, attention is being paid to whether Samsung Electronics will present a change in its position on production cuts amid the ‘semiconductor cold wave’ in the conference call that will follow following the performance announcement.
According to the preliminary results announced on the 6th, Samsung Electronics’ operating profit in the fourth quarter of last year on a consolidated basis was 4.3 trillion won, a 69% decrease compared to the same period last year, recording an ‘earning shock’ (performance shock). Sales were tentatively tallied at KRW 70 trillion, down 8.5% from the same period last year. On an annual basis last year, sales increased by 7.9% to 301.77 trillion won, surpassing 300 trillion won in annual sales for the first time, but operating profit fell 16% to 43.37 trillion won. The final results to be announced today are expected to be at a similar level.
The industry is paying attention to the message related to production cuts to be presented in the conference call to be presented later rather than the earnings announcement. In a situation where the memory semiconductor industry is facing the worst recession ever, it will depend on whether Samsung Electronics, the industry’s No. The timing of the rebound is also expected to change.
Stock markets have already regarded Samsung Electronics’ production cuts as a fait accompli and are pouring out positive prospects for a future market rebound, but some in the industry say that Samsung Electronics will not formalize artificial production cuts to reduce wafer inputs.
■ KOSPI bearish start outlook
On the 31st, the domestic stock market is expected to show a bearish trend, affected by the sharp decline of US tech and growth stocks such as Tesla (-6%) and Nvidia (-6%) the previous day.
The MSCI Korea Index ETF fell -2.2% and the MSCI Emerging Index ETF fell -2.0%. Seo Sang-young, a researcher at Mirae Asset Securities, predicted that the one-month NDF won-dollar exchange rate is 1230.99 won, and if this is reflected, the won-dollar exchange rate will start rising by 3 won and the KOSPI will start dropping by around 0.8%.
Researcher Seo said, “We should pay attention to Samsung Electronics’ conference call following the announcement of the fourth quarter results.” He said, “What investors want to check is whether Samsung Electronics, the number one in the memory semiconductor industry, will be able to satisfy their curiosity regarding ‘capacity management’.” Because it contributed to the possibility,” he explained.
Han Ji-young, a researcher at Kiwoom Securities, said, “Even though Samsung Electronics’ first-quarter preliminary results recorded a shock earlier this month, the reason semiconductor stocks performed well was because of expectations for a rise in memory prices due to Samsung Electronics’ decision to cut production, in addition to a favorable macro environment.” “There will be changes depending on whether production cuts materialize or not,” he predicted. He added, “Considering the weight of semiconductor stocks in the domestic stock market, it can also affect the supply and demand of foreigners who have recorded aggressive net purchases (regarding 7 trillion won since the beginning of the year) in the KOSPI.”
Yeom Seung-hwan, director of eBest Investment & Securities, said, “The US stock market plunged, but the domestic stock market was shocked in advance the previous day, so the impact is expected to be somewhat limited.” It will go crazy,” he predicted.
“If there is no production cut by Samsung Electronics, there will be a temporary shock, but since the overall production cut in the semiconductor industry has already begun and facility investment is decreasing, it is judged that the direction of the recovery of the semiconductor economy in the second half of the year will not change.” “-However, it should be noted that the speed may be slowed down without Samsung Electronics’ artificial production cuts, which may lead to some disappointing sales,” he added.
■ US stock market declines amid FOMC boundaries
On the 30th (local time), the Dow Jones Index closed at 33717.09, down 260.99 points (0.77%) from the battlefield. The S&P 500 index closed at 4017.77, down 52.79 points (1.30%) from the battlefield, and the Nasdaq closed at 11393.81, down 227.90 points (1.96%).
Investors are expected to raise interest rates by 0.25 percentage points at the FOMC regular meeting scheduled for the 31st to 1st, but are concerned regarding the possibility that Fed Chairman Jerome Powell will show a hawkish stance.
Nvidia’s share price fell nearly 6% that day. AMD shares fell regarding 4%. Car stocks such as Tesla -6%, Ford -2%, and GM -4% plunged due to concerns regarding intensifying competition following Ford’s price cuts. Semiconductor companies such as Micron -3.3%, Nvidia -6%, AMD -4% plunged due to uncertainty ahead of AMD’s earnings announcement.
■ The German economy declined by 0.2% in the fourth quarter of last year… Facing a Recession
The Federal Statistical Office of Germany announced on the 30th (local time) that Germany’s fourth quarter gross domestic product (GDP) (preliminary figure) decreased by -0.2% compared to the previous quarter. The Federal Statistical Office explained that “consumers who are suffering from price turbulence are reducing consumption spending”.
If negative growth continues in the first quarter of this year, the German economy will fall into a technical recession, meaning negative growth for two consecutive quarters. Most experts predict that the German economy will contract once more in the first quarter. However, the German government expects that the economy will return to an upward trend following this spring.
“Our country has succeeded in averting a terrible economic crisis,” said German Deputy Chancellor and Minister of Economics and Climate Protection Robert Harbeck, while introducing the German government’s Economic Outlook for 2018. “he said.
The German government expects the German economy to grow by 0.2% this year. In October of last year, it had predicted a negative growth of 0.4%, but then withdrew the negative growth forecast.
■ Is the EV market price war spreading? Tesla earpods cut too
The price cut war started by Tesla, the leader in the US electric vehicle market, is in full swing. The Wall Street Journal (WSJ) reported on the 30th (local time) that Ford Motor Company of the United States decided to cut the price of the electric Mustang Mach-E by 1.2-8.8% depending on the model. With this move, consumers can purchase the Mustang Mach-E for up to $5,900 less than before.
Ford said it was able to cut prices due to reduced production costs for electric vehicles through supply chain efficiency, etc., and that it would help maintain competitiveness amid rapid market changes.
Although Ford didn’t directly mention it, this price cut seems to be a response to Tesla’s awareness. Mustang Mach-E, a sports utility vehicle (SUV), is classified as a competitive model of Tesla Model Y.
Reporter Jang Chang-min cmjang@hankyung.com
