The KOSPI wobbled on semiconductor headwinds and barely held the 6,000 level. The index, which had surged on artificial intelligence (AI) investment hopes led by Samsung Electronics and SK hynix, plunged as the two stocks corrected. In the market, some said the structure overly dependent on the semiconductor "two tops" amplified the decline.
According to the Korea Exchange (KRX) on the 28th, the KOSPI ended at 6,023.66, down 732.09 points (10.84%) from the previous trading day. On the main board, 878 stocks fell and 36 rose, with most showing weakness.
Semiconductor stocks led the decline. Samsung Electronics and SK hynix plunged 13.39% and 14.65%, respectively. Samsung Electronics(1P) (-12.01%), SK Square (-15.60%), Samsung Electro-Mechanics (-15.92%), Samsung Life Insurance (-8.51%), and Samsung C&T (-10.16%), among other semiconductor-related and beneficiary stocks, also fell sharply across the board.
Market watchers said the semiconductor concentration is widening the index's drop. As of the end of June, Samsung Electronics and SK hynix together accounted for more than 50% of KOSPI market capitalization. If the two stocks wobble, the entire index shakes.
Yoon Yeo-sam, an analyst at Meritz Securities, said, "As the combined market-cap weight of Samsung Electronics and SK hynix within the KOSPI200 expanded to 60.7%, the diversification effect weakened significantly," adding, "Since the peak, while the KOSPI fell 2,358.8 points, the semiconductor sector explained 1,892 points, accounting for 80.2% of the total decline."
The problem is that a rotation into other stocks did not follow during this correction. Typically, when leaders take a breather, buying shifts to relatively less-risen stocks, cushioning the index's fall, but this time that flow was limited.
In fact, in July the KOSPI fell 28.9%, and the KOSPI200 ex-mega-cap index excluding Samsung Electronics and SK hynix also dropped 24.9%. While semiconductor bellwethers led the decline, other stocks also fell in tandem, chilling overall market sentiment.
Some, however, view the semiconductor concentration itself as a natural outcome given corporate earnings. Lee Jae-won of Yuanta Securities Korea said, "Since top large caps dominated profit share, the concentration of flows was reasonable," adding, "If anything, market-cap weight has not kept up with profit share, leaving market-cap weight undervalued relative to earnings estimates."
A monthlong plunge has frozen investor sentiment. Lee Kyung-min of Daishin Securities said, "A vicious cycle of subdued sentiment and supply-demand pressure is reproducing and amplifying bad news." Lee added, "We're even taking low-probability negatives as a done deal."
Big Tech earnings this week are expected to be a watershed. SK hynix reports on the 29th, and Samsung Electronics on the 30th. The key is whether outlook upgrades resume in their guidance. Microsoft and Meta report on the 30th, and Amazon and Apple on the 31st. The market is watching whether these corporations maintain their capital expenditures (CAPEX).
Analysts broadly say valuation appeal has instead grown. According to Daishin Securities, the KOSPI's intraday low of the 6,030 level today corresponds to 5.1 times the 12-month forward price-earnings ratio (PER), the lowest since 2000. Lee said, "Even if semiconductor earnings forecasts have stalled, current valuations are excessively undervalued."