Has the "only buyer" of Korean stocks left early?

The Korean stock market is facing a crucial liquidity test. The last line of defense propping up the KOSPI index under relentless selling pressure from retail and foreign investors—the largest-ever share buyback plan in history by Samsung Electronics and SK Hynix, totaling about $40 billion—was declared ended weeks ahead of schedule, and the market is now confronting the "liquidity vacuum" previously warned about by Goldman Sachs.

Samsung Electronics' buyback plan ended this week, and SK Hynix's is down to its final few trading days. Over the previous two months, these two companies were virtually the only net buyers in the Korean stock market, absorbing over $25 billion in combined selling pressure from both foreigners and retail investors. With corporate buyback support suddenly withdrawn, the KOSPI fell 2% on Wednesday (October 7), falling below the 7,000-point mark once again, with foreign investors selling a net $1.9 billion in a single day.

Worse still, Samsung Electronics’ Q3 results were released, with both revenue and operating profit falling short of market expectations. Today (October 8) will also see the confluence of semiconductor ETF rebalancing and option expiry, abruptly raising market volatility risks. Who will pick up the slack has become the core issue for the Korean stock market right now.

Buyback Plans: Propping Up the Market for Two Months

In late August of this year, Samsung Electronics and SK Hynix successively announced share buyback plans totaling KRW 55 trillion (about $40.5 billion), breaking the record for the largest shareholder return program in Korean history.

Among them, SK Hynix pledged to repurchase KRW 40 trillion from August 20 to November 19, while Samsung Electronics planned to buy back KRW 15 trillion from August 24 to November 21.

The timing was quite sensitive. Just weeks before the announcements, the Korean stock market had undergone a steep collapse in July—SK Hynix recorded its largest single-day plunge in history, retail investors suffered heavy losses on leveraged memory ETFs, and many vowed they would “never touch KOSPI again.”

Afterwards, both companies broke buyback records on almost every trading day. According to Goldman Sachs’ Seoul trading desk, in the four weeks ending September 22, corporate buybacks absorbed about $27 billion in sell flows, while during the same period, retail investors net sold around $18 billion and foreigners net sold about $10 billion.

Per-share data from Goldman Sachs shows that for both Samsung and SK Hynix, the “corporate buybacks” column displays a vertical surge, while selling by foreign investors and retail investors continued—the performance of these two stocks was “primarily supported by corporate buybacks.”

Running Out of Ammunition Ahead of Schedule

Goldman Sachs Seoul analyst Heather Oh estimated in a September 30th report that both buyback plans would be completed well ahead of the November deadlines:

• Samsung Electronics: Buyback progress had reached 87.3% (KRW 13.1 trillion executed, target of KRW 15 trillion), and at a then-rate of about 2 million shares (around KRW 570 billion) per day, projected to finish in 3 to 4 trading days (i.e., in early October).

• SK Hynix: Buyback progress was at 74.8% (KRW 29.9 trillion executed, target of KRW 40 trillion), expected to complete in roughly 10 trading days (i.e., mid-October), assuming a daily pace of about 600,000 shares.

Bloomberg’s statistics that same day drew the same conclusion: roughly 80% of both plans had already been executed, with completion set about a month ahead of schedule. Cho Junkee, an analyst with SK Securities, warned that market volatility “may be somewhat heightened” once the buybacks conclude.

A week later, this prediction came true. Goldman’s Seoul trading desk confirmed in its October 7 close report that Samsung Electronics’ buyback plan “was actually finished the previous day”; the only remaining corporate buy demand in the market was SK Hynix’s buyback, at about $517 million (KRW 710 billion)—a figure already halved from its peak and still falling.

Who Will Step In?

With the exit of buybacks, the market’s alternative support is extremely limited. Goldman Sachs’ flow data for Samsung Electronics as of October 2 for the past month showed:

• Corporate buybacks: Net purchases of +$8.5 billion, by far the largest single buyer

• Local institutions: Net purchases of +$2.5 billion

• Retail investors: Net sales of -$7.5 billion

• Foreign investors: Net sales of -$3.4 billion

• Pension funds: Net sales of -$0.3 billion

In other words, Samsung’s buyback volume was more than triple the size of all other buyers combined. Excluding corporate buybacks, there were virtually no investors willing to be net buyers of Samsung shares in September.

Since July 1, foreign investors have net sold nearly KRW 12 trillion in Samsung stocks. Retail investors were also net sellers, while Samsung’s share price still declined about 14% in Q3—even as the company executed one of the world's largest buyback plans.

On the first day after buybacks ended, the KOSPI fell 2.0% to 6,803.9 points, again failing to reclaim 7,000. Foreigners net sold $1.9 billion, local institutions net sold $502 million, and the tech sector faced concentrated selling. SK Hynix dropped 2.8%, Samsung fell 1.3%.

The only net buyers that day were Korean retail investors, who’d previously “sworn off buying”—net buying $1.9 billion, including $630 million of SK Hynix and $175 million of Samsung. This mirrors their pattern in July, feverishly chasing rallies only to be left holding the bag.

October 8: Multiple Risks Collide

The withdrawal of buybacks comes at a particularly tricky moment. Goldman’s Heather Oh points out in the latest report that four major events will converge on October 8:

1. Q3 earnings guidance: The market consensus for operating profit has been cut from about KRW 114 trillion in August to KRW 105.5 trillion, mainly due to the appreciating Korean won; Goldman’s research team forecasts KRW 106 trillion.
2. Semiconductor ETF rebalancing: Seven semiconductor ETFs totaling about KRW 19 trillion ($14 billion) in assets will be rebalanced. Samsung is expected to face systematic selling due to weight limits, while SK Hynix, SK Square, and semiconductor equipment stocks may see buying.
3. Options expiry.
4. Buyback exit: The first full trading day after Samsung's buyback ends.

Goldman concludes: “Given continued net selling by foreign investors (cumulative -$2.6 billion over five consecutive trading days), the overlap of Q3 earnings guidance, mechanical selling from semiconductor ETF rebalancing, options expiry, and the end of buybacks could trigger notable volatility in Samsung Electronics in the near term, especially on October 8.” The trading desk added that its clients’ orders were biased towards selling throughout September, “and today as well.”

As of now, Samsung’s Q3 results are out: revenue is KRW 195 trillion, below market expectations of KRW 201.9 trillion; operating profit is KRW 107.4 trillion, also below the expected KRW 108.67 trillion. Both revenue and profit missed forecasts.

The Core Variables in the Bull-Bear Battle

Goldman summarizes the market’s future course with two key questions: Will foreign investors return to the Korean market, and can Samsung and SK Hynix sustain strong profitability and earnings guidance?

• The bull case: The core AI fundamentals remain solid. If the two companies announce a new round of shareholder return programs during their late-October earnings calls, it could reignite market confidence.
• The bear case is more direct: The market has never genuinely cleared supply and demand at current price levels; the 7,000-point “support” was essentially an artificial price created by a buyer, and that buyer has stopped buying. The KOSPI fell about 17% in Q3, making it one of the worst performers among global benchmark indices—a decline that happened even with the full support of corporate buybacks.

Meanwhile, the broader market environment is also deteriorating: Korea’s energy minister admitted that data center power demand projections were “indeed overestimated,” sending related grid stocks sharply lower that day (HD Electric -8.1%, Hyosung Heavy -7.8%); global bond yields continued to climb, further compressing valuation space for equity assets.

The “liquidity vacuum” is no longer a hypothesis—it is now reality.