The KOSPI closed on the 13th down 5.46% (348.89 points) at 6,035.35 (Yonhap, Korea Economic Daily, Hankyoreh, Dong-A Ilbo). It opened down in the 3% range, plunged into the 4% range in the morning as a sell-side sidecar was triggered, and fell in the 6% range intraday, breaching the 6,000 line before the close was set above it (Yonhap, SBS, Kyunghyang Shinmun, Korea Economic Daily). The Kosdaq was down 1.43% at 837.03 (Yonhap). SK hynix fell 10% and Samsung Electronics 7.4% (Yonhap, SBS), and the KOSPI’s market capitalization dropped below 5,000 trillion won (Dong-A Ilbo, SBS). The trigger cited is the sell-off of chip stocks in New York on the 12th on news that a Chinese DRAM maker claimed a technology advance (Korea Economic Daily, Yonhap Infomax). The Philadelphia Semiconductor Index fell 2.67% that day (Kukmin Ilbo, Korea Economic Daily). The won-dollar rate closed up 10 won at 1,345.1 won (Yonhap, Newsis, Chosun Biz).
The day showed how heavily the market leans on a single sector, chips, and how easily that reliance can be shaken by one line of overseas news. The drop was big enough to trigger a sidecar, and with a high balance of money invested on borrowing, there is concern that falls can feed on themselves. A weaker won raises import prices and the burden of overseas payments.
The value of your stocks, funds and pensions may have fallen. Investors who bought with borrowed money are more sensitive to further declines. Overseas payments and travel cost more as the exchange rate rose. If you invested in products that hold Samsung Electronics and SK hynix, now is the time to check how the product is structured and how large the losses are.
The view that, with record earnings and some experts forecasting a much higher index in the long run, falling this far on a single Chinese company’s claim is excessive.
The view that if China catches up in memory technology, Korean chip profit margins could be squeezed, and foreign selling is pricing in that structural change early.
What is confirmed is the closing price and size of the drop, the sidecar, and the declines in the two big stocks. The cause of the drop cannot yet be pinned down. Whether the Chinese company’s DRAM advance is still at the ‘claim’ stage or will translate into actual mass production and market-share shifts has not been confirmed. Today, watch whether U.S. chip stocks rebound, whether foreigners return to net buying, and how this week’s U.S. consumer price release changes the rate outlook.
Yonhap · Korea Economic Daily · Hankyoreh · Dong-A Ilbo · SBS · Kyunghyang Shinmun · Newsis · Chosun Ilbo · Chosun Biz · Kukmin Ilbo · Bloomberg · Reuters, the 13th
KOSPI plunges 5.46% to 6,035.35. Sell-side sidecar triggered, 6,000 line breached intraday
SK hynix fell 10% and Samsung Electronics 7.4%. A Chinese DRAM maker’s claim of a technology advance is cited as the trigger, but reports differ on the cause of the drop
The KOSPI closed on the 13th down 5.46% (348.89 points) at 6,035.35 (Yonhap, Korea Economic Daily, Hankyoreh, Dong-A Ilbo). It barely held the 6,000 line from the previous close of 6,384.24, and Korea Economic Daily noted it was the lowest level since the July 30 low. The market opened down in the 3% range, the slide deepened to the 4% range in the morning, and a sell-side sidecar was triggered. It was the first in two months (Yonhap, SBS, Korea Economic Daily, Dong-A Ilbo). Intraday, the loss widened to the 6% range and the 6,000 line was breached (Kyunghyang Shinmun, Korea Economic Daily). The Kosdaq ended down 1.43% at 837.03 (Yonhap). SK hynix fell 10% and Samsung Electronics 7.4% (Yonhap, SBS), and single-stock leveraged products that track the two stocks at roughly twice their moves plunged 14–20% (Yonhap). Dong-A Ilbo and SBS reported that the KOSPI’s market capitalization fell below 5,000 trillion won, and SBS said the volatility index, known as the fear gauge, rose 23%. Korea Economic Daily reported that the balance of debt-fueled investing, or ‘bitu’, topped 34 trillion won, the highest in three months.
The shock from Chinese DRAM maker ChangXin Memory (CXMT) was cited most often as the trigger. On the New York market on the 12th, chip stocks were sold on news that the Chinese company claimed a DRAM technology advance, and the Philadelphia Semiconductor Index fell 2.67% (Korea Economic Daily, Kukmin Ilbo, Yonhap Infomax). The Nasdaq slipped 0.44% and the Dow rose 0.38% (Newsis, Yonhap Infomax, Chosun Ilbo). Bloomberg said Korean chip stocks sank on worries about Chinese rivals and remarks by Broadcom executives, and Korea Economic Daily called it a ‘double whammy’ compounded by the surge in oil prices. The won-dollar rate closed up 10 won at 1,345.1 won amid Mideast-driven oil gains and the stock plunge (Yonhap, Newsis, Chosun Biz). Outlets differ on where to focus on the cause. Yonhap posed the question ‘why’ about a plunge right after record chip earnings, while SBS separately looked at why foreigners keep dumping Samsung Electronics and SK hynix. Chip stocks stayed weak during U.S. trading on the 13th as well (Reuters, Bloomberg). The U.S. session ended at this paper’s editing deadline, so we could not include the result.