South Korean investors want to "profit from settling" SK Hynix, turning to Trump-benefiting stocks and small domestic stocks.

The stock price of South Korean SK Hynix has risen by 26% this year due to the promotion of artificial intelligence. However, political issues and valuation concerns have led local investors to focus on domestic companies, posing a threat to SK Hynix's stock. Retail investors in Korea are accelerating their exit, possibly reaching the largest monthly withdrawal in at least 10 years. But they are also investing in non-tech beneficiaries of Trump policies, as well as some small Korean domestic stocks. As SK Hynix is expected to have its best January performance since 2009, market observers say that investors are highly tempted to take profits. Concerns about competition and slowing growth have caused artificial intelligence leader NVIDIA Corporation (NVDA.US) to lose momentum this month. Meanwhile, Korean investors have been shifting funds to non-tech industries benefiting from Donald Trump's presidency policies, as well as small Korean domestic stocks expected to undergo corporate reforms. An Hyungjin, CEO of Billionfold Asset Management, said, "The market is more concerned about the rapid changes that may occur after Trump took office." "I am worried that if NVIDIA Corporation's rebound stalls, SK Hynix may not further rise." SK Hynix will announce its quarterly net profit on Thursday morning, expected to reach a record 59 trillion Korean won (around 4 billion US dollars). The company is benefiting from its position as a leading supplier of high-bandwidth memory (HBM) chips, which can be used in conjunction with NVIDIA Corporation's AI processors. Driven by the AI boom, SK Hynix's stock price has more than doubled in the past two years, although it is significantly behind NVIDIA Corporation's 7-fold increase. However, it is worth noting that concerns about weak demand for cars and electronic products have been suppressing the overall chip industry, including memory chips. Gary Tan, portfolio manager of Allspring Global Investments, said that Korean investors may take profits on SK Hynix's sharp rise, "as memory prices are expected to decline by the first half of 2025." Meanwhile, foreign investors driving the stock's rise "may see memory as lagging in the field of AI." The rising trend of SK Hynix has made its stock price appear too high, with a price-to-book ratio of 2.8 times, higher than the three-year average of 1.6 times. Apart from valuation factors, investors are also attracted to leave the tech industry due to the boost expected from Trump's policies and enter other industries such as shipbuilding and nuclear energy. In South Korea, some investors expect that after the president's impeachment due to the failure of implementing martial law, the opposition party's corporate reform agenda will receive support. Companies that are smaller in scale, focused on the domestic market, and have room for improving shareholder returns are seen as particularly benefiting. Marcello Seongsoo Ahn, portfolio manager at Quad Investment Management, said, "Many companies may perform well due to business law revisions, and SK Hynix's stock price may rise, but it will be surpassed by these companies in terms of performance."