The South Korean stock market is confronting a critical liquidity test.

The last line of defense that had been keeping the KOSPI index barely stable amid relentless selling pressure from retail and foreign investors — the record-breaking combined stock buyback program of approximately $40 billion by Samsung Electronics and SK Hynix — has ended weeks ahead of schedule, and the market is now staring directly into the "liquidity vacuum" that Goldman Sachs had previously warned about.

Samsung Electronics' buyback program concluded this week, while SK Hynix has only a handful of trading days left before its own program wraps up. Over the preceding two months, these two companies were virtually the only net buyers in the South Korean stock market, single-handedly absorbing more than $25 billion in combined selling pressure from foreign and retail investors.

With the corporate buyback support suddenly withdrawn, the KOSPI fell 2% on Wednesday (October 7), once again losing the 7,000-point threshold, as foreign investors recorded a single-day net sell of $1.9 billion.

Making matters worse, Samsung Electronics' third-quarter results were released simultaneously, with both revenue and operating profit falling short of market expectations. Today (October 8) will also see multiple events converge, including a semiconductor ETF rebalancing and options expiration, sharply elevating the risk of market volatility.

Who will step in to buy has become the most critical question facing the South Korean stock market.

Buyback Programs: Two Months of Holding Up the Market

In late August of this year, Samsung Electronics and SK Hynix successively announced a combined 55 trillion won (approximately $40.5 billion) stock buyback program, setting a record for the largest shareholder return project in South Korean history.

Among them, SK Hynix committed to repurchasing 40 trillion won between August 20 and November 19, while Samsung Electronics planned to buy back 15 trillion won between August 24 and November 21.

The timing was notably delicate. Just weeks before the buyback announcements, the South Korean stock market had experienced a severe crash in July — SK Hynix recorded its largest single-day decline in history, and South Korean retail investors suffered heavy losses on leveraged memory ETFs, with many vowing to "never touch the KOSPI again."

Afterward, both companies set new buyback records on virtually every trading day. According to Goldman Sachs' Seoul trading desk, during the four weeks ending September 22, corporate buybacks absorbed approximately $27 billion in selling, while retail investors net sold about $18 billion and foreign investors net sold about $10 billion during the same period.

Goldman Sachs' stock-by-stock data shows that for both Samsung Electronics and SK Hynix, the "corporate buyback" column exhibited a vertical surge, while foreign and retail outflows continued — the performance of both stocks was "primarily supported by corporate buybacks."

Running Out of Ammunition Ahead of Schedule

Goldman Sachs Seoul analyst Heather Oh estimated in a September 30 report that both buyback programs would be completed significantly ahead of their November deadlines:

Samsung Electronics: Buyback progress had reached 87.3% (13.1 trillion won executed against a target of 15 trillion won). At the then-current pace of approximately 2 million shares (about 570 billion won) per day, completion was expected within 3 to 4 trading days (i.e., early October).

SK Hynix: Buyback progress had reached 74.8% (29.9 trillion won executed against a target of 40 trillion won). At a pace of approximately 600,000 shares per day, completion was expected within about 10 trading days (i.e., mid-October).

Bloomberg's statistics on the same day were consistent with the above conclusions: approximately 80% of the two programs had been executed in total, with overall completion roughly one month ahead of the original schedule. SK Securities analyst Cho Junkee warned that after the buybacks end, "market volatility may be somewhat elevated."

One week later, that prediction came true. Goldman Sachs' Seoul trading desk confirmed in its October 7 closing report that Samsung Electronics' buyback program had "effectively ended yesterday," leaving SK Hynix's remaining buyback of approximately $517 million (about 710 billion won) as the only corporate buying left in the market — a figure that has already halved from its peak and continues to decline.

Who Will Step In to Buy?

After the buybacks exit, the market's absorption capacity is extremely limited. Goldman Sachs' fund flow statistics for Samsung Electronics over the month ending October 2 show:

Corporate buybacks: net buy +$8.5 billion, the largest single buyer

Local institutions: net buy +$2.5 billion

Retail investors: net sell -$7.5 billion

Foreign investors: net sell -$3.4 billion

Pension funds: net sell -$300 million

In other words, Samsung Electronics' own buyback scale exceeded the combined total of all other buyers by more than three times. Excluding corporate buybacks, virtually no investor was willing to net buy Samsung Electronics shares in September.

Since July 1, foreign investors have cumulatively net sold nearly 12 trillion won of Samsung Electronics, retail investors were also net sellers, and Samsung Electronics' stock price still fell approximately 14% in the third quarter — despite the company implementing one of the largest buyback programs in the world.

On the first day after the buybacks exited, the KOSPI fell 2.0% to 6,803.9 points, once again failing to reclaim the 7,000 level. Foreign investors net sold $1.9 billion, local institutions net sold $502 million, and the technology sector bore the brunt of concentrated selling. SK Hynix fell 2.8%, while Samsung Electronics dropped 1.3%.

The only net buyers that day were South Korean retail investors who had previously "vowed never to buy again" — net buying $1.9 billion, including $630 million of SK Hynix and $175 million of Samsung Electronics. This mirrors their history of frantically chasing the July highs and subsequently getting trapped.

October 8: Multiple Risks Converge

The timing of the buyback exit is particularly problematic. Goldman Sachs' Heather Oh noted in a latest report that four major events will occur simultaneously on October 8:

Third-quarter earnings preview: The market consensus for operating profit has been revised down from an August peak of approximately 114 trillion won to 105.5 trillion won, mainly dragged by won appreciation; Goldman Sachs' research team forecasts 106 trillion won.

Semiconductor ETF rebalancing: Seven semiconductor ETFs with a combined asset scale of approximately 19 trillion won (about $14 billion) will undergo rebalancing. The market expects Samsung Electronics to face mechanical selling pressure due to weight caps, while SK Hynix, SK Square, and semiconductor equipment stocks are expected to see buying.

Options expiration.

Buyback exit: The first full trading day after Samsung Electronics' buyback ends.

Goldman Sachs' conclusion is: "Given persistent foreign net selling (five consecutive trading days totaling -$2.6 billion), the combination of the third-quarter earnings preview + semiconductor ETF rebalancing mechanical selling + options expiration + buyback exit could trigger significant volatility in Samsung Electronics in the near term, especially on October 8." The bank's trading desk added that its client orders leaned toward selling throughout September, "and today is no different."

Currently, Samsung Electronics' third-quarter results have been released: revenue of 195 trillion won, below market expectations of 201.9 trillion won; operating profit of 107.4 trillion won, also below the expected 108.67 trillion won — both revenue and profit missed expectations.

The Core Variables in the Bull-Bear Battle

Goldman Sachs boils down the forward path to two key questions: whether foreign investors will return to the South Korean market, and whether Samsung Electronics and SK Hynix can maintain strong earnings momentum and guidance.

The bull case: AI core fundamentals remain solid, and if the two companies announce a new round of shareholder return plans at their late-October earnings calls, market confidence could be reignited.

The bear case is more direct: The market has never truly achieved supply-demand clearing at current price levels. The 7,000-point "support" is essentially a price artificially manufactured by a buyer — and that buyer has stopped buying. The KOSPI fell approximately 17% cumulatively in the third quarter, one of the worst performances among major global benchmark indices — and this decline occurred with corporate buybacks in full force supporting the market.

Meanwhile, the broader market environment is also deteriorating: South Korea's energy minister acknowledged that data center electricity demand forecasts were "indeed overestimated," and related grid concept stocks plunged that day (HD Electric fell 8.1%, Hyosung Heavy dropped 7.8%); global bond yields continued to rise, further compressing valuation space for equity assets.

The "liquidity vacuum" is no longer a hypothetical — it is a reality that has already arrived.