Investor sentiment soured following earnings reports from U.S. memory semiconductor companies, leading to a sharp decline in the South Korean stock market. Heavy selling of shares in Samsung Electronics and SK Hynix caused the KOSPI to drop more than 5% at one point.
On August 6, the KOSPI opened at 6,478.75, down 1.81% from the previous trading day, and fell as low as 6,238.32, a decline of 5.46%. The rapid drop triggered a sell-off sidecar for the KOSPI.
Foreign investors led the decline, net selling over 1.8 trillion won in the stock market. While individual investors also bought a similar amount, it was not enough to prevent the index from falling.
Heavy selling pressure concentrated on major semiconductor stocks. As of 11:13 a.m., Samsung Electronics was down 5.89%, and SK Hynix fell 8.75%. Other semiconductor-related stocks, including SK Square and Samsung SDI, also saw significant declines of 11.26% and 9.88%, respectively.
Bloomberg reported that the KOSPI exhibited notable weakness among major Asian stock markets. The after-hours trading saw U.S. companies SanDisk and Western Digital drop 8% and 12%, respectively, following their earnings announcements, which dampened investor sentiment for Asian memory semiconductor stocks.
Both companies reported earnings that exceeded market expectations, but their future growth outlooks fell short of already high investor expectations. The disappointment regarding earnings forecasts, amid already reflected demand for artificial intelligence (AI) and rising memory prices, led to profit-taking.
Gary Tan, a portfolio manager at Allspring Global Investments, told Bloomberg, "Investors are starting to ask what additional upward momentum is needed to continue investing in Asian memory semiconductor stocks."
Reuters also noted that the South Korean stock market led the decline in Asian tech stocks. In Japan, memory company Kioxia and semiconductor equipment firm Tokyo Electron also experienced significant drops, indicating that the weakness in U.S. semiconductor stocks was spreading across the Asian market.
On the previous night, AMD reported earnings that surpassed market expectations but still fell over 7%. Amid evaluations that it did not meet heightened expectations, the Philadelphia Semiconductor Index also dropped by 1.40%.
* This article has been translated by AI.
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