Hit by the surge in 30-year U.S. Government Bonds yields to the highest level in 19 years, Samsung Electronics and SK hynix are plunging 5% in NEXTRADE (NXT) premarket trading (8 a.m.–8:50 a.m.) on the 19th.
As of 8:45 a.m., Samsung Electronics(005930) is trading on NXT at 253,500 won, down 15,000 won (5.59%) from the previous session. At the same time, SK hynix(000660) is also trading at 1,554,000 won, down 108,000 won (6.5%).
The sustained high level of U.S. Government Bonds yields appears to have spurred selling sentiment. According to the Wall Street Journal (WSJ) and other foreign media on Oct. 18, 30-year U.S. Treasury yields climbed intraday to 5.33% a year, the highest level since 2007 in 19 years. When market rates rise, they increase corporations' funding expense and raise the stock discount rate, typically weighing on equities.
Behind the rise in yields are changes in buyers of Government Bonds and long-term issuance by global big tech. According to Bloomberg, in the past, U.S. Government Bonds were purchased by institutional investors relatively insensitive to price changes, but recently they have shifted to private investors sensitive to revenue. On top of that, as big tech issues ultra-long 30-year bonds, analysts say Government Bonds supply and demand are becoming dispersed.