South Korean equities suffered their steepest one-day decline in nearly five months on Tuesday, with the benchmark KOSPI sliding almost 11% as a global rout in semiconductor stocks battered SK Hynix and Samsung Electronics. Investor concerns were further amplified by the blockbuster stock market debut of China's CXMT, which intensified fears over rising competition from Chinese chipmakers, according to Business Today.
Market Detail
The KOSPI ended the session down 732.09 points, or 10.84%, at 6,023.66, marking its biggest daily fall since March 4, when the index recorded a historic decline following the outbreak of the Iran war. During intraday trade, the index dropped as much as 11.3%, triggering a circuit breaker for the eighth time this year and the 14th time on record. It also slipped below the 6,000 mark for the first time since April 14.
So far this month, the KOSPI has fallen 29%, surpassing its previous record monthly decline of 27% recorded in October 1997. Despite being down 34% from its June peak of 9,114.55, the index remains 43% higher on a year-to-date basis.
Semiconductor Heavyweights
Memory chip manufacturer SK Hynix plunged 14.7% after its American depositary receipts (ADRs) fell to an all-time low in New York and dropped below their original US listing price. Samsung Electronics declined 14.4%, marking its sharpest single-day fall since October 2008.
Together, SK Hynix and Samsung Electronics account for more than half of the KOSPI's total weighting, magnifying the impact of the semiconductor selloff on the broader market. Both companies are scheduled to announce their second-quarter earnings later this week.
Chinese Competition Fears
Investor sentiment was also weighed down by developments in China, including the blockbuster listing of ChangXin Memory Technologies (CXMT) and reports that a Chinese state-backed company has started manufacturing immersion DUV lithography equipment.
Kim Seok-hwan, a Seoul-based market analyst at Mirae Asset Securities, said: "The market's concern lies less in CXMT's current earnings and more in its potential for accelerated capacity expansion to rival Korean companies and technology development following its IPO."
Regulatory and Investor Response
According to reports, South Korea's top financial regulator said it could consider imposing limits on retail investments in single-stock leveraged exchange-traded funds (ETFs) if required. Such products, introduced in May, have been cited as a source of increased market volatility.
Foreign investors were net sellers of shares worth 5 trillion won (USD 3.42 billion), while retail investors purchased equities worth 4 trillion won. Market breadth remained overwhelmingly negative, with only 36 of the 917 traded stocks advancing, while 878 ended lower.
Currency and Trading Flows
The South Korean won recovered from early losses to close 0.2% stronger at 1,462.5 per US dollar on the onshore settlement platform, after having weakened as much as 0.5% to 1,472.1 earlier in the session. Traders attributed the late rebound to dollar sales by SK Hynix linked to its US share offering.
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