The KOSPI declined 19.11% this month through the previous day, with market capitalization falling 1,312.79 trillion won to 5,616.75 trillion won, Korea Exchange reported. Semiconductor stock weakness drove the downturn, as the KRX semiconductor index dropped 22.80%, Samsung Electronics fell 21.26%, and SK Hynix declined 27.81%. Analysts cite weakened investor sentiment amid 'semiconductor peak' concerns and geopolitical risks following the AI-fueled semiconductor rally.
KOSPI Records 1,312 Trillion Won Market Cap Loss This Month
Korea Exchange data showed KOSPI market capitalization stood at 5,616.75 trillion won as of the previous day's closing, down from nearly 7,000 trillion won at the end of last month. The 1,312.79 trillion won decline this month accompanied the 19.11% index drop through the previous day.
The KRX semiconductor index fell 22.80% during the period. Samsung Electronics declined 21.26% and SK Hynix dropped 27.81% over the same timeframe. The source attributed the semiconductor stock volatility to recent 'semiconductor peak' theories that have dampened investor sentiment, compounded by geopolitical risks.
Analysts Assess Oversold Conditions Despite Valuation Concerns
Byun Jun-ho, researcher at IBK Investment & Securities, stated that "considering fundamentals and valuation, the index plunge is judged to be excessive undershooting (overselling)." He added that "because it is not judged to be a situation reflecting strong extreme uncertainty comparable to the dot-com bubble collapse, financial crisis, or COVID-19 phase, we see low possibility of reflecting the decline rates of past extreme risk phases."
Lee Kyung-min, researcher at Daishin Securities, said that "although external uncertainties exist, the KOSPI decline is excessive compared to actual influence and ripple effects." Lee analyzed that "the semiconductor sector plunge appears to be a result of complex factors including doubts about the AI industry narrative, valuation retracement following short-term surges, leverage position liquidation, and supply-demand shocks, rather than fundamental deterioration."
However, some forecasts suggest negative impacts on investor sentiment as earnings expectations for the semiconductor sector have risen recently, creating possibilities of falling below earnings consensus. Changes in sentiment are being detected even among securities firms where optimism had been dominant.
Korea Investment & Securities recently projected SK Hynix's second-quarter operating profit would fall 8% below consensus. The firm also lowered its operating profit estimates for this year and next year by 9% and 11% respectively from previous projections. Kiwoom Securities recently reduced its target price for Samsung Electronics from 430,000 won to 390,000 won.
Geopolitical Risks and Supply-Demand Instability Cited as Variables
While U.S. Consumer Price Index (CPI) for last month came in below market expectations, easing inflation concerns, geopolitical risks and supply-demand changes are cited as variables.
Lee Jae-won, researcher at Yuanta Securities, stated that "in a situation where low-price net buying entities such as pension funds are absent, individual investor net buying capacity that had been absorbing foreign rebalancing volume since the beginning of the year has slowed, and foreign capital inflow is also minimal." Lee assessed that "doubts will be resolved when there is re-easing of geopolitical conflicts, upward guidance for hyperscaler capital expenditure, and confirmation of strong earnings."
Lee Eun-taek, researcher at KB Securities, said that "various factors including credit and margin call forced selling, foreign net selling, deposit decline, and Exchange Traded Fund (ETF) rebalancing are complexly intertwined." Lee stated that "follow-up supply-demand anxiety remains and supply-demand is difficult to forecast, but in the long term, extreme stock price fluctuations due to supply-demand have provided investment opportunities."
FAQ
Q: How much did KOSPI stocks decline this month through the previous day?
A: The KOSPI fell 19.11% this month through the previous day, according to Korea Exchange data. Market capitalization declined 1,312.79 trillion won to 5,616.75 trillion won during the period.
Q: Why did Korean semiconductor stocks experience sharp declines this month?
A: Analysts cite multiple factors including investor sentiment shifts amid 'semiconductor peak' theories, geopolitical risks, doubts about AI industry narratives, valuation retracement following rapid gains, and leverage position liquidations, rather than fundamental business deterioration.
