Kospi Sinks 3.7%; BofA Puts Samsung, SK Hynix at 2-3x P/E

South Korea’s Kospi fell 3.73% to 5,552.74 on 20 October 2026, Yonhap reported, with SK hynix down 4.23%, heading for its lowest close since April, and Samsung Electronics down 2.98%.

A Bank of America report dated 16 October puts Samsung at 3.0 times and SK Hynix at 2.7 times consensus 2027 earnings, according to summaries by TechFlow Research and Stockstar. We have not read the Bank of America report itself.

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What Happened in Seoul

The index fell 215.27 points after declining as low as 5,493.24, Yonhap said, and had plunged around 21 percent over seven trading sessions from 6 October through Thursday before two days of gains.

Foreigners and institutions sold a net 535.4 billion won and 1 trillion won of shares, while individuals were net buyers of 900 billion won, per Yonhap. SK hynix closed at 1.22 million won and Samsung Electronics at 211,500 won.

“Concerns over credit risks and profitability surrounding AI investment have yet to be fully resolved, limiting the sustainability of the rebound,” Daishin Securities analyst Lee Kyoung-min told Yonhap.

What Was Posted on X

Bloomberg posted this at 02:40 UTC on 20 October, before the close. It says chipmakers drove losses in South Korean equities as foreign investors reduced exposure on a rise in Treasury yields and a weak stock market debut by a data center firm. That is Bloomberg’s framing of the morning; Yonhap’s closing report, quoted above, puts the Kospi down 3.73% at the close.

The Valuation Bank of America Describes

According to TechFlow’s summary, Bank of America puts Samsung Electronics at 3.0 times 2027 and 2.8 times 2028 estimated earnings, and SK Hynix at 2.7 times and 2.3 times, based on consensus earnings per share. Stockstar’s summary gives the same four figures.

In previous up-cycles, the two companies traded at 4 to 7 times, the summaries say, so current multiples are down 30% to over 50%. Bank of America places the valuation within the cyclical trough range while keeping super-cycle-level earnings forecasts, per TechFlow.

SK Hynix fell 57% from its June peak to October, against a roughly 51% average pullback over the past two-plus decades, according to the summaries. That pullback took 4 months, against a historical average of 15 months.

Current DRAM average selling prices are up 20% to 30% year-over-year, TechFlow said, whereas historical cyclical troughs typically saw declines of 10% to 30%. The report argues that the recent corrections are disconnected from core memory fundamentals, per the summary.

What JPMorgan Sees in the Flows

JPMorgan’s Korea equity strategy team estimated that the Kospi’s forward price-to-earnings ratio had fallen to around 4, a historic low, and 8.4 excluding memory-related stocks, Maeil Business Newspaper’s Pulse reported on 20 October.

Despite the low valuations, the bank found “no convincing evidence in market flows that the Kospi had reached a bottom,” Pulse said. It said share buybacks by Samsung Electronics and SK hynix “have ended, weakening a source of buying support.”

Bloomberg reported on 30 September that the two chipmakers planned to buy back a combined 55 trillion won ($40.5 billion) of their own shares, and that at the pace then, the buying “could be over by mid-October.”

The Demand on the Other Side

Micron’s annual report says that as of 3 September 2026, the transaction price allocated to its remaining performance obligations was approximately $134 billion, of which $13 billion had been recognized as contract liabilities. As of 28 August 2025, its remaining performance obligations “were not material,” the filing says.

Morgan Stanley estimates hyperscalers and AI cloud providers will spend $1.58 trillion in 2027, up roughly 60% from about $980 billion this year, and $1.8 trillion in 2028, Fortune reported on 19 October.

Bloomberg reported that an 800 trillion won investment in four semiconductor plants by Samsung Electronics and SK Hynix is planned for the city of Gwangju, with the first expected to begin mass production by 2030. US Commerce Secretary Howard Lutnick told Bloomberg Television: “They need to build here.”

The Case From Nomura

In a recent global memory report described by Maeil Business Newspaper on 20 October, Nomura forecast that memory demand would exceed supply through at least 2028, named Samsung Electronics and SK hynix “stocks to watch” and rated both “Buy”. It set price targets of 670,000 won for Samsung Electronics and 4.7 million won for SK hynix, which Maeil put at upside of 216.78% and 287.7% from closing prices of about 211,500 won and 1,212,000 won.

Maeil reported that Nomura called concerns about AI-related investment excessive, estimated that the combined revenue of OpenAI and Anthropic rose about 507% year over year in the third quarter, while noting that a sharp fourth-quarter recovery would be needed to reach the annual level the market expects, and tracked 22.3 gigawatts of new data center facilities this year and 31.5 gigawatts next year. Nomura cautioned that its outlook would need to be reconsidered if data center investment plans were continually scaled back or projects with secured funding were significantly delayed.

As we read it, Bank of America and JPMorgan describe how cheaply the market prices the two companies, and Nomura, in a report Maeil described the same day, argues that the demand behind their earnings holds through at least 2028.

The Bear Case in the Same Reports

At investor meetings in Singapore described in Bank of America’s 16 October report, hedge funds were bearish while most long-only investors remained bullish, TechFlow said. Bearish arguments included high borrowing costs for neocloud providers, more Chinese DRAM supply and declining storage content per GPU, per the summary.

Morgan Stanley’s note argues that in a spending pause, “we’re likely to see the most disruption at the tail of the bullwhip,” in memory, optics and other small-dollar parts, Fortune reported. It points to the late-2022 memory downturn, when NAND shipments fell only about 5% while prices fell 20% to 30%.

Connecting This Week’s Coverage

We reported on 19 October that Micron and Sandisk have about $225 billion of memory sales under contract, by our arithmetic from their filings and calls. On 20 October we covered Asia’s morning slide, the Elice AI cloud IPO closing down 32% on its first day, and record credit-default-swap prices for Meta and Nvidia.

As we read it, the two Korean chipmakers now sit where those threads meet: priced at 2 to 3 times estimated 2027-28 earnings, as Bank of America is summarised, while Micron’s filing shows contracted demand rising from not material to about $134 billion in a year.

The Structural Read

As we read it, the valuation figures and the flow figures point in different directions: Bank of America, as summarised, places the multiples in the cyclical trough range, while JPMorgan found no convincing evidence in market flows of a bottom, per Pulse.

As we read it, one support has gone: the two chipmakers’ combined 55 trillion won buyback, which Bloomberg said could be over by mid-October, and which JPMorgan said has ended, per Pulse.

As we read it, the demand side is documented in other companies’ filings and forecasts, Micron’s about $134 billion of remaining performance obligations and Morgan Stanley’s $1.58 trillion of 2027 spending, not in Samsung’s or SK hynix’s own order books.

Three Implications

LOW MULTIPLES Samsung trades at 3.0 times and SK Hynix at 2.7 times consensus 2027 earnings, per Bank of America’s report as summarised by TechFlow and Stockstar.

A DEEPER, FASTER FALL SK Hynix fell 57% from its June peak to October in 4 months, against a roughly 51% average pullback over about 15 months, per the same summaries.

DEMAND ON PAPER Micron’s remaining performance obligations were approximately $134 billion on 3 September 2026, up from not material a year earlier, its annual report says.

The Business Engineer Lens

This story maps onto the Business Engineer framework The AI Memory Chokepoint.

The framework puts it this way: “Memory is becoming the new compute. HBM growth is outpacing accelerator demand, making memory the rate-limiting factor in the AI scaling equation.”

As we read it, this week’s Korean valuations test that thesis from the market side. The framework was published in December 2025 and does not address the October 2026 selloff.

What Is Not Established

We have not read Bank of America’s 16 October report; its figures here are as TechFlow Research and Stockstar summarise them. Price-to-earnings multiples on 2027 and 2028 estimates depend on consensus forecasts that can change.

The valuation and demand figures are not like for like, and Micron’s obligations are its own, not Samsung’s or SK hynix’s. Nothing here links the day’s fall to any single report, and nothing here is a forecast.

The Bottom Line

The Kospi fell 3.73% on 20 October, Yonhap reported, while Bank of America’s 16 October report, as summarised, puts Samsung and SK Hynix at 2 to 3 times consensus 2027 to 2028 earnings, against 4 to 7 times in earlier up-cycles.