Goldman Sachs Warns of Samsung Electronics Volatility on Earnings Day
Goldman Sachs has issued a warning about potential volatility in Samsung Electronics' share price on October 8, coinciding with the company's preliminary third-quarter earnings announcement. The investment bank highlights three key factors contributing to this volatility: semiconductor ETF rebalancing, options expiry, and the end of Samsung's share buybacks.
Firstly, seven semiconductor ETFs with total assets under management of around $14 billion are set to rebalance on October 8. Goldman Sachs anticipates mechanical selling pressure on Samsung Electronics due to its high weighting in these funds, with some capital likely flowing into other semiconductor stocks such as SK Hynix and SK Square.
Additionally, the end of Samsung Electronics' 15 trillion won share buyback program and options expiry are expected to add to the selling pressure. As of October 6, the share buyback was 97% complete by value, reducing buying demand in the market. Goldman Sachs has also revised its third-quarter operating profit forecast for Samsung down by about 5%, from 112 trillion won to 106 trillion won, citing a weaker won-dollar exchange rate.
Despite these short-term challenges, Goldman Sachs maintains a positive outlook on Samsung's fundamentals, particularly in DRAM and NAND markets, with strong growth expected in High Bandwidth Memory (HBM) shipments. The firm emphasizes that the return of foreign buying and sustained earnings momentum will be crucial for Samsung Electronics' share price moving forward.