◇Stock Market Plummets as Blue-Chip ‘Samsung INICS Corporation’ Crashes
According to MP Doctor, as of 3:30 p.m. that day, the KOSPI closed at 5,663.24, down 360.42 points (5.98%) from the previous trading day. The index opened higher, rising to 6,228.52 early in the session, but selling pressure intensified sharply, causing the 6,000 mark to collapse during the session and ultimately bringing the index back to levels last seen in April.
In terms of market participants, retail investors recorded net sales of 1.9767 trillion won, while foreign investors recorded net sales of 1.2157 trillion won. Although institutional investors made net purchases in the 3 trillion won range, it was insufficient to stem the decline.
At the same time, the KOSDAQ closed at 662.68, down 43.17 points (6.12%) from the previous trading day. Similar to the KOSPI, it opened higher, rising to 719.39 early in the session, but subsequently turned lower, plunging to 630.99 during the session.
By investor type, retail investors led the index lower with net sales of 457 billion won. In contrast, foreign investors and institutional investors engaged in bargain hunting, posting net purchases of 308.3 billion won and 146.4 billion won, respectively.
◇First-Ever Two Consecutive Days of Circuit Breakers
Notably, as the KOSPI and KOSDAQ indices plummeted that day, circuit breakers were triggered simultaneously for the second consecutive day. The circuit breaker was first triggered in the KOSDAQ market at 12:19:13, followed by the KOSPI market at 12:32:33. This marks the first time in stock market history that circuit breakers have been triggered on two consecutive days.
A circuit breaker is a mechanism that suspends all trading for 20 minutes to mitigate market shock if the index remains down more than 8% from the previous trading day’s closing price for at least one minute. After trading resumes, orders are accepted for 10 minutes, followed by trading at a single price.
This was the ninth time this year that a circuit breaker was triggered on the KOSPI and the 15th time in history. This is the fourth time the KOSDAQ circuit breaker has been triggered this year, and the 14th time in history. Notably, this marks the fourth time—including March 4, June 8, and July 28—that circuit breakers have been triggered simultaneously on both the KOSPI and KOSDAQ markets.
Market observers attribute the extreme contraction in investor sentiment to a confluence of factors, including concerns over China’s rise in the semiconductor sector, controversies over the profitability of U.S. artificial intelligence (AI) investments, and supply-demand shocks caused by single-stock leveraged exchange-traded funds (ETFs).
In particular, SK hynix, the second-largest company by market capitalization, announced its earnings that day but failed to prop up the stock market and instead became the epicenter of the decline. SK hynix disclosed that its operating profit for the second quarter of this year was provisionally estimated at 60.5426 trillion won, a 557.2% increase from the same period last year. Revenue stood at 79.3187 trillion won, a 256.8% increase year-over-year.
However, selling pressure intensified as disappointment spread across the market that SK hynix’s quarterly results fell short of expectations and that no additional shareholder return measures were proposed. Additionally, funds invested in single-stock leveraged ETFs were liquidated, which is believed to have further widened the decline in semiconductor stocks.
At this time, SK hynix(000660)was trading at 1,401,000 won, down 9.61% from the previous trading day, while SamsungElectronics(005930)also fell 5.23% to 208,500 won. SamsungElectronics(1P)(005935) continued its downward trend, dropping 3.03%. SKSQUARE(402340)fell 8.11%, SamsungElectroMechanics(009150)dropped 7.63%, and SAMSUNG C&T CORPORATION(028260)also extended its losses, falling 6.39%.
Top KOSDAQ stocks by market capitalization also extended their losses. JUSUNG ENGINEERING Co.,Ltd.(036930)traded at 116,100 won, down 9.86% from the previous trading day, while ECOPRO BM CO., LTD. fell 9.04%, ECOPRO CO., LTD(086520) fell 7.29%,SAM CHUN DANG PHARM CO. LTD(000250)fell 9.32%, LigaChem Biosciences(141080)fell 8.50%, ABL Bio Inc.(298380)fell 7.99%, Alteogen Inc.(196170)fell 4.72%, and Peptron, Inc.(087010)fell 5.38%.
As of the previous day, the KOSPI had fallen 28.9% on a cumulative monthly basis. This surpasses the previous record for the largest monthly decline—a 27% drop in October 1997. This means that the Korean stock market has fallen more sharply this month than during the period when the national economy collapsed due to the International Monetary Fund (IMF) bailout. Even during the global financial crisis in October 2008, the decline was around 23.1%.
Han Ji-young, an analyst at KIWOOM Securities, analyzed the recent market decline, stating, “With the KOSPI currently down around 33% from its peak and leading sectors such as semiconductors down around 40% from their peaks, the perceived intensity of fear has increased, triggering a vicious cycle that is fueling further panic selling.”
She continued, “The KOSPI’s forward P/E ratio has reached a historic low of 5.1x. If we factor in a 27% downward revision to earnings estimates—similar to the level seen during the financial crisis—the adjusted forward P/E ratio is only about 7.0x,” adding, “Based on current valuations, this suggests the KOSPI is approaching a bottom.”
