The KOSPI index has fallen below the 7000 mark for the first time in over two months. This decline comes despite the successful listing of SK Hynix's American Depositary Receipts (ADR) and strong semiconductor export performance. Concerns over a potential breakdown in U.S.-Iran peace talks have further dampened investor sentiment. Analysts predict that extreme market volatility will continue for the foreseeable future.
On July 13, the Korea Exchange reported that the KOSPI closed at 6806.93, down 669.01 points (8.95%) from the previous trading day, marking the third-largest drop this year. Since January, there have been 11 trading days where the KOSPI fell more than 5%, six days with declines over 7%, and four days, including today, with drops exceeding 8%. Notably, in the past month alone, significant declines have occurred on June 8 (-8.29%), June 23 (-9.99%), and July 2 (-7.89%), raising concerns about ongoing market volatility.
The semiconductor sector was at the center of today's decline, with heavy selling pressure on major stocks like Samsung Electronics and SK Hynix. SK Hynix plummeted 15.37% to close at 1,845,000 won, losing the 1,900,000 won mark, while Samsung Electronics fell 10.7% to finish at 254,500 won. Other semiconductor stocks, including SK Square (-17.60%) and Samsung Electro-Mechanics (-18.62%), also experienced double-digit losses.
Despite the recent strong performance of SK Hynix's ADR on the Nasdaq and solid growth in semiconductor earnings, the market reacted more sensitively to concerns about a peak in memory chip demand.
Additionally, rising geopolitical tensions in the Middle East due to U.S.-Iran conflicts have intensified risk-averse sentiment among investors. With international oil prices and the dollar strengthening, and U.S. stock index futures showing weakness, negative sentiment quickly spread to the domestic market.
Supply and demand dynamics also contributed to the index's decline. While individual investors made net purchases of 3.88 trillion won in a bid to buy at lower prices, it was insufficient to support the market. Foreign investors sold a net 1.73 trillion won, and institutions sold a net 2.2 trillion won, leading the index lower. This month, pension funds engaged in rebalancing, recording a net sale of 646 billion won.
Hwang Seung-taek, head of research at Hana Securities, stated, “Concerns about the peak in the memory semiconductor market and deteriorating investor sentiment are the main causes of the decline. The selling by foreign investors has exacerbated volatility, increasing fatigue and risk-averse sentiment among market participants.”
* This article has been translated by AI.
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