Despite the successful listing of American depository receipts (ADR), KOSPI is facing the threat of breaking below the 7,000 level intraday as SK hynix plunges around 10%. As military tensions between the United States and Iran flare up again and sentiment toward semiconductor investment weakens, the 18th sell-sidecar of the year was triggered on the main board.
As of 11:42 a.m. on the 13th, KOSPI is trading at 7,095.55, down 380.39 points (5.09%) from the previous session. KOSPI opened down 63.91 points (0.85%) and extended losses, sliding to as low as 7,017.60 intraday.
The Korea Exchange (KRX) at 10:34 a.m. triggered a sell sidecar on the main board, halting the effectiveness of program sell quotes for five minutes. This came as KOSPI 200 futures fell more than 5% from the reference price for over one minute.
Through today, a total of 35 sidecars have been triggered on the main board, including 17 buy and 18 sell. That far exceeds last year's full-year total (3) and has already surpassed the annual record during the 2008 global financial crisis (26).
Flows show foreigners and institutions leading the index decline. Individuals net bought 1.5 trillion won, but foreigners and institutions are net selling 1.13 trillion won and 465 billion won, respectively.
Large-cap stocks by market capitalization are broadly weaker. SK hynix, which made a successful debut on the U.S. Nasdaq over the weekend, is down around 10%, losing the 2 million won level intraday. Samsung Electronics is also off more than 5%, and Samsung Electro-Mechanics and SK Square are plunging 13%–14%, with selling pressure spreading across semiconductor-related names.
Kim Ju-yeon, an analyst at Mirae Asset Securities, said, "The momentum from SK hynix's ADR listing issue has faded, and the stock is weak on expectations that second-quarter results will miss market estimates."
Military tensions between the United States and Iran also weighed on sentiment. U.S. Central Command said on the 12th (local time) that it launched additional airstrikes against Iran, which was threatening merchant ships in the Strait of Hormuz. The United States continued strikes over Iran's attacks on merchant ships, and Iran moved to retaliate by targeting U.S. bases in the Middle East.
The Islamic Revolutionary Guard Corps (IRGC) even declared a complete blockade of the Strait of Hormuz. As geopolitical risks rise, Nasdaq futures are weaker and international oil prices are climbing, dampening risk appetite.
Concerns about the semiconductor cycle also persisted. Korea Investment & Securities Co. issued a report projecting that SK hynix's second-quarter operating profit will fall short of the market consensus.
Chae Min-suk, an analyst at Korea Investment & Securities Co., projected that SK hynix's second-quarter operating profit will be 60.4 trillion won, about 8% below the 65 trillion won consensus.
The analyst said, "Because the HBM sales mix is higher than competitors, the average selling price (ASP) increase was lower than the market average," and added, "As the memory industry shifts to three- to five-year long-term supply contracts, corporate value will be determined by how long higher profitability persists rather than quarterly ASP growth."
At the same time, the KOSDAQ index also reversed lower, giving back all early gains. KOSDAQ opened at 839.72, up 2.29 points (0.27%) from the previous session, but then turned weak and lost the 830 level.
With foreigners net selling 290 billion won, individuals and institutions are net buying 150 billion won and 140 billion won, respectively.
Among top KOSDAQ market-cap names, performance is mixed. Alteogen, Jusung Engineering, and Wonik IPS are gaining, while EcoPro, Rainbow Robotics, and Kolon TissueGene are weaker.