Samsung and SK Hynix’s massive expenditures spark valuation concerns, dragging down Japanese and South Korean stock markets; oil prices briefly return above 70.

Samsung and SK Hynix’s massive expenditures spark valuation concerns, dragging down Japanese and South Korean stock markets; oil prices briefly return above 70.

Samsung and SK Hynix’s massive spending plans have sparked investor concerns, weighing on Asian markets on Monday. Meanwhile, reports suggest that the US and Iran have agreed to stop mutual attacks after an escalation over the weekend, boosting US stock futures.

The Korea Composite Stock Price Index later saw losses widen further to 3%. Samsung Electronics shares fell 4.7%, and SK Hynix dropped 3.1%. The two chip giants are reportedly set to jointly announce a ten-year investment plan of up to $1.3 trillion, with the market reacting strongly to the resulting capital expenditure pressure. Meanwhile, the Nikkei 225 index once fell close to 2%, but later trimmed losses to around 0.7%.

In the energy market, the US and Iran clashed militarily again over the weekend, talks stalled, and supply risks in the Strait of Hormuz were reignited. WTI crude futures returned to above the $70 mark; international Brent crude rose 0.78%, quoted at $73 per barrel.

Asia-Pacific markets under pressure overall, US stock futures edge higher

Due to the combination of two major negative factors, Asia-Pacific markets opened weak overall on Monday. The Nikkei 225 index fell about 0.7%, while Australia’s S&P/ASX 200 index bucked the trend, rising 0.41%.

As for US stock futures, market sentiment was slightly mixed. Dow Jones Industrial Average futures rose about 0.2%; S&P 500 futures rose 0.34%; Nasdaq 100 futures gained 0.42%.

According to reports, the US and Iran have agreed to cease mutual attacks and are scheduled to meet in Qatar this Tuesday to resume talks on topics such as the Strait of Hormuz and ending the war. This news quickly improved sentiment in US stocks. Shoji Hirakawa, Chief Global Strategist at Tokai Tokyo Research Institute, said: "The market seems to believe that with mid-term elections approaching, President Trump has no choice but to compromise. Investors view the mutual attacks between the US and Iran as temporary and do not expect the situation to escalate into another war."

US stocks overall performed poorly last week, with tech stocks facing obvious sell-off. The S&P 500 index and Nasdaq Composite fell nearly 2% and 4.6% respectively. Nvidia and Alphabet each dropped over 8%, while Meta, Apple, and Amazon fell more than 4%. The Dow Jones Index, due to having less tech exposure, managed to rise 0.6% against the trend.

Ed Yardeni, President of Yardeni Research, attributed this round of tech stock correction to "AI fatigue," believing that investors have started to question whether the massive investments by hyperscale cloud businesses in AI infrastructure will ultimately translate into returns.

Samsung and SK Hynix spending plans prompt valuation concerns

According to Korea Economic Daily, Samsung Electronics and SK Hynix will jointly disclose a combined ten-year investment plan of up to 20 trillion Korean won (about $1.3 trillion) at a government briefing hosted by South Korean President Lee Jae-myung on Monday. Once the news broke, the share prices of both companies dropped immediately.

Previously, the Samsung Group was to separately announce a ten-year investment blueprint worth 10 trillion Korean won (about $646 billion), covering semiconductor wafer fabs, AI data centers, advanced packaging, batteries, and displays. This included about 3 trillion won for new wafer fabs in southwestern Korea, 3.6 trillion won for the Yongin semiconductor cluster, and over 3.5 trillion won for AI data center construction.

Although both companies are major beneficiaries of the AI boom—SK Hynix is a main supplier of Nvidia’s high-bandwidth memory (HBM) chips, and Samsung continues to ramp up investment to close the technology gap with competitors—the scale of these capital expenditure plans has made investors worry about short-term profitability, sparking sell-offs.

US-Iran conflict escalates, Hormuz risks reignite

The direct catalyst for the oil price rise was the latest military clash between the US and Iran near the Strait of Hormuz. According to US Central Command, US fighter jets struck ten Iranian military targets in and near the Strait of Hormuz at dawn on Sunday. The trigger was a Panama-flagged tanker, “M/T Kiku,” which was attacked by an unidentified flying object while transiting the strait, carrying more than 2 million barrels of crude oil.

According to Xinhua, on June 27 local time, US President Trump posted on social media: “US fighter jets have just struck Iranian missile and drone storage facilities and coastal radar sites because they again violated the ceasefire agreement. They may never learn! Eventually, we will no longer exercise restraint and will be forced to complete the actions we’ve already successfully initiated through military means. If it comes to that, the Islamic Republic of Iran will no longer exist!”

According to a Pakistani source involved in the negotiations, talks aimed at ending the conflict have stalled, but representatives remain in Switzerland waiting for opportunities to restart discussions. A US official said: "Both sides will suspend hostile actions, and ships can freely transit," and said that technical negotiations will continue under a memorandum of understanding framework.

This renewed conflict has revived market concerns about disruptions to Middle East energy supplies, rapidly pushing up oil prices.

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