Investor sentiment was shaken as SK Hynix's earnings report failed to revive market confidence. The company's results fell short of expectations, and concerns about the semiconductor industry persisted during its conference call, leading to an unprecedented situation where both the KOSPI and KOSDAQ markets experienced circuit breakers for two consecutive days.
On July 29, the KOSPI closed at 5,663.24, down 360.42 points (5.98%) from the previous trading day. The KOSDAQ started the day at 713.71, up 7.86 points (1.11%), but quickly turned downward, finishing at 662.68, a drop of 43.17 points (6.12%). Notably, both foreign and individual investors were significant sellers in the stock market, with individuals selling 1.9767 trillion won and foreigners 1.2101 trillion won, while institutions bought a net 3.1489 trillion won. In the KOSDAQ, individuals sold 457 billion won, while foreigners and institutions bought 307.2 billion won and 146.4 billion won, respectively.
During the trading session, the market saw a decline of over 8%, triggering circuit breakers in both markets for the second consecutive day. The KOSDAQ's circuit breaker was activated at 12:19 PM, halting trading for 20 minutes, followed by the KOSPI's activation at 12:32 PM. Earlier that morning, both markets had also experienced temporary halts on sell orders due to program trading.
Despite the focus on SK Hynix's earnings and conference call, the results were insufficient to provide a foundation for recovery. The company reported a record revenue of 79.3187 trillion won and an operating profit of 60.5426 trillion won for the second quarter of 2026. However, these figures fell slightly short of market expectations, which were 83.9194 trillion won in revenue and 64.6941 trillion won in operating profit, failing to boost investor sentiment.
During the conference call, discussions centered on the supply outlook for DRAM and NAND chips, as well as the potential expansion of long-term supply contracts. However, ongoing concerns about the semiconductor market and a lack of specific plans for shareholder returns led to increased disappointment among investors. Consequently, SK Hynix's stock plummeted by 9.61%, while Samsung Electronics fell by 5.23%.
Choi Hyun-jae, head of research at Yuanta Securities, noted that the decline intensified following SK Hynix's earnings announcement, particularly as the Korean stock market faced significant losses compared to other Asian markets. He suggested that lingering doubts about the profitability of major tech companies were contributing to the downturn.
Lee Kyung-min, a researcher at Daishin Securities, remarked that the market, which had hoped for a rebound, instead saw a wave of panic selling centered around semiconductors. This led to a further decline in stock prices, dampening investor sentiment and resulting in increased net selling by individual investors.
Additionally, the simultaneous weakness in U.S. semiconductor stocks weighed on the domestic market. The Nasdaq Composite Index closed down 0.22%, while the Philadelphia Semiconductor Index fell 4.49%, marking its fourth consecutive day of losses. Major semiconductor stocks, including Micron (-8.85%), AMD (-8.15%), Intel (-5.86%), Qualcomm (-4.21%), and Western Digital (-6.91%), also experienced declines. Geopolitical risks in the Middle East further contributed to investor unease.
Moreover, the upcoming increase in deposit requirements for single-stock leveraged exchange-traded funds (ETFs) set to take effect on July 31 was identified as another factor exacerbating the market's decline. Choi explained that investors were likely selling off assets to increase cash reserves ahead of this change, as they needed to liquidate holdings to meet the new requirements.
While the securities industry anticipates continued high volatility in the near term, they also view the current market conditions as oversold. Choi stated that the market has broken below key moving averages, suggesting that while the decline may not stabilize immediately, there is potential for reduced volatility moving forward.
* This article has been translated by AI.
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