KOSPI evaporates 21% in two days... Semiconductor shock causes 'domino' plunge

▲ KOSPI, domestic stock market/AI generated image

Disappointing earnings from SK Hynix once again hit the South Korean stock market. KOSPI and KOSDAQ trading were halted for two consecutive days, and KOSPI plummeted over 21% in two days.

According to Bloomberg, a US economic media outlet, on July 29 (local time), the KOSPI sharply dropped 10% during trading, falling below the 6,000 mark. The index was pushed to its lowest level since early April. Following a 10.84% drop the previous day, the cumulative decline over two days exceeded 21%.

At the center of the sell-off was SK Hynix. SK Hynix's second-quarter operating profit surged by 557% compared to the same period last year, but it fell short of market expectations. Its stock price plunged about 15% during trading. Samsung Electronics, which is awaiting its earnings release, also fell 8%.

KOSDAQ also fell more than 8%, leading to a 20-minute trading halt. The selling pressure was so intense that circuit breakers were triggered on both KOSPI and KOSDAQ for two consecutive days. Out of 15 circuit breakers triggered on KOSPI since 2000, nine have occurred this year.

KOSPI has fallen about 40% from its peak a month ago. The monthly decline also reached approximately 35%, making it highly likely to record the largest ever drop. Doubts about the profitability of AI investments, the pursuit by Chinese semiconductor companies, and forced liquidation of leveraged products combined to amplify the downward trend.

Josh Gilbert, Senior Analyst for APAC and MENA at eToro, said, "Considering the weight of SK Hynix and Samsung Electronics in KOSPI, there is nowhere to hide when both stocks fall together." The market structure, concentrated on these two semiconductor giants, amplified the earnings shock into a crisis for the entire stock market.

[Article Key Summary]

-KOSPI plunged 10% during trading, falling over 21% in two days, and the 6,000 mark also collapsed.

-SK Hynix's operating profit surged by 557%, but it fell short of expectations, causing its stock price to plunge about 15% during trading.

-KOSPI circuit breakers have been triggered 9 times this year, and the monthly decline is expected to reach approximately 35%.

*Disclaimer: This article is for investment reference only, and we are not responsible for investment losses based on it. The content should be interpreted for informational purposes only.*