- SK Hynix reported record profits for the second quarter but undershot investors’ expectations, leading to a significant sell-off.
- The KOSPI index dived as much as 12.6%, extending a near 11% slump from the previous day, reaching its lowest level since early April.
- Shares in SK Hynix plummeted 9.6% after missing analyst expectations, while Samsung Electronics fell as much as 14% before trimming losses.
- The slide in the KOSPI index has erased almost 40% of its value from a peak reached little more than a month ago.
- Despite the recent tumble, the KOSPI is up 41.5% in U.S. dollar terms year-to-date, making it the best-performing major market this year.
- Analysts have expressed concerns that disappointment over SK Hynix’s earnings highlights worries about how long tech companies can sustain their spending.
South Korea's KOSPI index experienced a dramatic decline, falling as much as 12.6% on Wednesday, following disappointing earnings reports from major chipmakers SK Hynix and Samsung Electronics. This drop extends a near 11% slump from the previous day, marking the index's lowest level since early April.123
The market has now lost nearly 40% of its value from a peak just over a month ago, raising concerns among investors. SK Hynix saw its shares plummet 9.6% after reporting a six-fold profit increase that still fell short of expectations, while Samsung shares dropped 5.2% after a similar trend.
Analysts noted that the disappointing results from SK Hynix have sparked panic selling, with Han Ji-young from Kiwoom Securities stating, “Hopes of the market rebounding today after a 10% plunge yesterday faded, triggering panic selling and forcing most stock investors to book losses.”6
Despite the recent turmoil, the KOSPI remains up 41.5% in U.S. dollar terms year-to-date, making it the best-performing major market this year. The South Korean government is reportedly reviewing market stabilization measures, as the two chipmakers account for over half of the KOSPI's market capitalization.5
The fallout has also affected shares in Taiwan’s TSMC, which fell 3% on the same day, reflecting broader concerns in the semiconductor sector.
“The KOSPI index has now erased almost 40% of its value from a peak reached just over a month ago, marking its steepest monthly decline on record. Analysts express concerns that the disappointing results from SK Hynix reflect broader worries about the sustainability of tech spending in the current market.”
The Guardian
