Korea's contribution to global earnings upgrades falls to 7.0%, Hana says

Korea’s contribution to global earnings upgrades fell to 7.0% from 32.3% in Hana Securities’ weekly data, even as Samsung Electronics and SK hynix estimates continued to rise.

Several Korean brokerages argue that the chip sell-off has overreacted to AI-spending risks. But slower earnings upgrades and the possibility of further foreign selling leave separate concerns about profit forecasts and the won.

Are Korean earnings estimates falling?

The percentage is Korea’s share of global upward earnings revisions in Hana’s dataset, as reported in its Nov. 9 Quant Comment. Hana nevertheless said Korea’s earnings revision rate remained the highest among countries. The decline in its contribution share does not establish a deterioration in that ranking.

At company level, the figures measure one-week changes in earnings-per-share estimates. SK hynix’s increase slowed to 1.70% from 10.07% in the preceding week; Samsung Electronics’ slowed to 2.62% from 6.37%. Both companies’ estimates were still rising. The figures show slower upgrades, rather than earnings downgrades.

Within the AI supply chain, the quant team highlighted a shift in upgrades toward AI logic and networking. AMD and Arista Networks recorded one-week EPS estimate increases of 9.65% and 12.62%, respectively.

Do project delays mean the AI cycle is ending?

Concerns about U.S. data-centre permitting could mean delays or smaller projects rather than construction halts, iM Securities argued in its Nov. 9 economy brief. The brokerage interpreted the shock as a risk of downward revisions to data-centre construction spending and total hyperscaler capital-spending forecasts, rather than evidence that the AI investment boom was ending.

Possible delays at individual projects were also insufficient evidence of an end to the AI investment cycle or a memory downturn, according to Yuanta Securities’ Nov. 6 market review.

What evidence would ease the concerns?

In its separate Nov. 9 strategy report, Hana argued that semiconductor shares had already priced in earnings cuts. Its strategists nevertheless identified both tech-sector credit risk and concern about future estimate reductions as causes of the decline.

The strategy team named falling technology investment-grade credit spreads and renewed confidence in earnings estimates as conditions for an index rebound. It linked that confidence to volatility indices falling below projected earnings growth rates. Changes to spending plans and earnings estimates remain separate measures of the potential impact.

How could AI sentiment affect the won?

Further losses in AI-related shares could prompt additional foreign selling of Korean equities and further won weakness, according to iM’s Nov. 9 FX brief. The brokerage also expected the won to strengthen if domestic shares rebounded.

At the Nov. 9 regular-session close, Samsung Electronics rose 0.64% to 189,900 won and SK hynix gained 0.35% to 1,136,000 won. The KOSPI fell 0.81% to 5,018.85, according to YTN’s closing report.