South Korea Daily Briefing

Donga Economy reported that Korean semiconductor companies are delivering record-level earnings in 2026, yet the sector P/E ratio has compressed to a six-year low — a valuation paradox that reflects the structural discount the market applies to chaebol governance complexity, US-China tech decoupling risk (Samsung's China exposure), and post-HBM-cycle concerns. Samsung Electronics and SK Hynix's HBM ramp has been the cycle driver, but investors appear to be discounting whether HBM pricing power is sustainable as AMD and Intel build their own accelerator stacks. The 6-year-low P/E is either the deepest value opportunity in Korean equities or a structurally compressed multiple that requires a governance catalyst to unlock.

POSCO Holdings posted Q3 operating profit growth of 48% as steel product sales improved — a meaningful cyclical recovery signal for Korea's second-largest industrial conglomerate. POSCO's earnings are a direct read on global construction and manufacturing demand, particularly from China (its largest export market). A +48% surge in a single quarter with commentary on 'improved steel product sales' suggests either volume recovery, price recovery, or both in China-facing steel trade. POSCO also has a significant EV battery materials (lithium, nickel) business through POSCO Future M — any upgrade in battery materials guidance would provide additional upside to consensus.

Donga Economy reported Korean system integration (SI) companies are expanding their addressable market by offering AI data centre build-out services beyond traditional IT — including computational infrastructure ('brain'), electrical grid connections, and cooling systems. Companies like Samsung SDS, LG CNS, and SK C&C are positioning for the enterprise AI infrastructure build cycle as Korean chaebols and government agencies accelerate AI adoption. This is a structural thematic: the AI capex cycle that has driven Nvidia's margin expansion is now cascading into Korean system integrators as the domestic AI deployment wave arrives, with government and financial sector as the first institutional customers.