South Korea's stock market faced another "Black Tuesday" as fears over the rapid rise of China's semiconductor industry weighed heavily on global investment sentiment. A sell-off led by Samsung Electronics and SK Hynix caused the KOSPI to drop more than 10% in a single day.
On July 28, the Korea Exchange reported that the KOSPI closed at 6,023.66, down 732.09 points (10.84%) from the previous trading day. The index quickly lost ground, falling below the 6,100 mark and even dipping to the 5,000 range, marking its first drop below 6,000 since April 14.
The catalyst for the decline was the semiconductor sector. Market concerns intensified after Chinese memory chip maker Changxin Memory Technologies (CXMT) surged 465% on its first day of trading on the Shanghai Stock Exchange. Additionally, news emerged that Chinese companies are beginning to localize deep ultraviolet (DUV) lithography equipment, raising worries about the long-term competitiveness of South Korea's semiconductor industry. The potential for increased competition from China's expanding memory production capacity and the possibility of global semiconductor investment shifting to China led to a wave of profit-taking, particularly in Samsung and SK Hynix.
The semiconductor issue also weighed on the U.S. stock market overnight, where semiconductor stocks experienced widespread declines. ASML fell 5.8%, while Nvidia dropped 5.0%, SanDisk plummeted 11.0%, and Micron decreased by 2.3%. Furthermore, skepticism surrounding a "circular deal" structure involving companies purchasing Nvidia chips raised concerns across the entire U.S. AI value chain.
Lee Kyung-min, a researcher at Daishin Securities, stated, "The semiconductor sector is at the center of today's sharp decline. The key issue is the shock from China." He noted that the combination of CXMT's listing and the news of DUV localization has reignited concerns about intensified long-term competition due to China's expanding memory production capacity. However, he added, "The KOSPI at the 6,030 level represents a 12-month forward price-to-earnings ratio of 5.1, the lowest since 2000. Even though recent semiconductor earnings forecasts have stagnated, leading to diminished confidence in performance, the current valuation is excessively undervalued."
* This article has been translated by AI.
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