[Edaily Reporter kyoungeun kim ] The South Korean stock market collapsed as a global flight of capital toward high-yield U.S. Treasuries coincided with a shock in the memory semiconductor sector originating in China. SamsungElectronics and SK hynix, the two leading semiconductor companies, plummeted by more than 7% and 10%, respectively. The KOSPI fell more than 7% during the session, dropping to the 5,900 level and triggering a sell-side circuit breaker for the first time in two months, but managed to narrow its losses toward the end of the session and barely recovered the 6,000 mark.

According to MP Doctor, the KOSPI closed at 6,035.35 on the 13th, down 348.89 points (5.46%) from the previous trading day. During the session, it plummeted as much as 7.41% to 5,911.11, falling below the 6,000 mark for the first time in 75 days (49 trading days) since July 30.

At 9:47 a.m., the Mini KOSPI 200 futures plunged more than 5%, triggering a sell-side circuit breaker for the first time in eight weeks.

The epicenter of the plunge was China’s rising semiconductor technology capabilities. SK hynix(000660)closed down 10.09% at 1,443,000 won, while SamsungElectronics(005930)closed down 7.39% at 232,000 won. Other stocks in the semiconductor value chain, such as SKSQUARE(402340)(-12.91%) and SamsungElectroMechanics(009150)(-8.34%), also plummeted one after another.

This comes as Changxin Memory (CXMT), considered a spearhead of China’s semiconductor self-reliance, announced plans to launch next-generation DDR5 memory for servers by the end of the year. Kim Hak-kyun, head of the Research Center at ShinyoungSecurities, said, “From an industry perspective, this is surprising news, as China is aiming to achieve by the end of this year what SamsungElectronics was expected to accomplish around 2028.” However, he added, “Since the semiconductor industry ultimately comes down to a battle of yield rates, we’ll have to wait and see if actual mass production materializes.”

CXMT’s stock price—the very source of the sharp decline—also fell 2.81% on the Shanghai Stock Exchange that day, closing at 46.98 yuan, below the 49 yuan closing price on its listing date last July. In essence, the intensifying competition was perceived not as positive news for a specific company but as a cause for concern regarding the profitability of the memory industry as a whole. The fact that the South Korean stock market was particularly hard-hit by the same negative news is attributed to a market structure heavily concentrated on memory semiconductors. This incident clearly exposed a vulnerability where even the slightest sign of intensifying competition in the memory sector causes the entire index to waver.

On top of this, high interest rates are weighing on the market and driving out foreign investors. The yield on the U.S. 10-year Treasury note recently surged to 5.36% during trading—its highest level since 2002. As a result, funds that had been concentrated in AI technology stocks are now shifting toward safe-haven assets. BlackRock Investment Institute, a subsidiary of BlackRock—the world’s largest asset manager—downgraded its U.S. equity investment outlook from “Overweight” to “Neutral” today. Conversely, it upgraded short-term U.S. Treasuries to “Overweight,” marking a reversal of its approximately six-year trend of reducing Treasury allocations.

High interest rates are also driving up financing costs for AI companies. Horkhan Broadcom, CEO of Broadcom, cited funding—not semiconductor supply—as the biggest constraint on the AI industry. AI investment sentiment has frozen even further following foreign media reports suggesting that OpenAI’s annualized revenue is around $50 billion, not the previously reported $70 billion. The Philadelphia Semiconductor Index also fell 2.67% the previous day, marking its fourth consecutive trading day of declines.

On that day, foreign investors net sold 4.5128 trillion won on the KOSPI. Of this amount, SK hynix (2.36 trillion won) and SamsungElectronics (1.36 trillion won) accounted for 82%. While retail investors (2.2271 trillion won) and institutional investors (1.6903 trillion won) made net purchases, their efforts were insufficient to offset the foreign outflow. Since the beginning of the year, foreign investors have sold off 203 trillion won worth of stocks during regular trading hours, with SK hynix (89.5 trillion won) and SamsungElectronics (87.4 trillion won) accounting for 87% of that total.

Kim Seok-hwan, an analyst at MIRAE ASSET SECURITIES, noted, “Foreign selling continues despite SamsungElectronics posting record quarterly earnings and SK hynix’s profit outlook being revised upward.” He added, “As share buybacks—which have supported the market on the downside—are nearing their end, sales of the same scale are now leading to greater price shocks.”

From a valuation perspective, analysts suggest the market is near bottom territory. Kim Min-kyu, an analyst at KB Securities, stated, “The primary factor behind the decline is the contraction of multiples; the KOSPI’s 12-month forward P/E ratio has fallen to 4.58x, an all-time low.” He identified the KOSPI range of 5,600 to the low 6,000s—corresponding to a forward P/B ratio of 1.1x to 1.2x—as a buying opportunity. JUNGDAWN Co., Ltd., an analyst at LS SECURITIES, also assessed that “the KOSPI 6,000 level reflects even a pessimistic scenario in which net income forecasts are reduced by 54%.”

However, SamsungSecurities recommended, “Considering geopolitical tensions in the Middle East and between Russia and Ukraine, as well as the variables surrounding the U.S. midterm elections, a phased approach is preferable to aggressively increasing exposure.” The market views the U.S. Consumer Price Index (CPI) release on the 14th and 15th and Anthropic’s Investor Day as the next key milestones.