South Korean stocks are plummeting day after day. The stock index has been in the 5,000 range, showi..

the bill of the K-shape boom ②

사진 확대 KOSPI, Samsung Electronics, and SK Hynix shares are displayed on the dealing room electronic board of Hana Bank’s headquarters in Jung-gu, Seoul. In the Korean stock market, where profits and market capitalization are concentrated in large semiconductor stocks, fluctuations in stock prices of the two stocks also have a large impact on the index and foreign supply and demand. [Yonhap News]

South Korean stocks are plummeting day after day. The stock index has been in the 5,000 range, showing a drop of nearly 10% every day. Underlying the decline in stock prices is foreigners’ “throwing Korean stocks.” As concerns over the pursuit of Chinese semiconductor companies and the continuity of AI investment spread, foreigners sold Samsung Electronics and SK Hynix first. As the two companies accounted for more than half of the KOSPI’s market capitalization, the plunge in memory stocks immediately led to a sharp drop in the entire market.

The plunge in the stock market showed why foreigners do not carry Korean stocks for a long time despite the semiconductor boom. Samsung Electronics and SK Hynix see their profits and stock prices jump quickly when memory prices rise, but their profit prospects will also fall sharply if there are concerns that the business could slow down. It is difficult for foreigners to grasp the proportion of such companies from the beginning, and as the stock price increases, they try to determine the valuation profit first.

Foreigners’ selling in the Korean market did not start suddenly. In the first half of 2026, foreigners net purchased about $61.9 billion on the Japanese stock market, converting the trading value of spot stocks on exchanges in each country into dollars. On the other hand, it net sold about $99.6 billion in the Korean stock market and $29.8 billion in the Taiwanese stock market. Korea’s net selling was 3.3 times that of Taiwan.

Why did foreigners buy Japanese stocks and sell Korean stocks. First of all, it is difficult to find a reason for the change in the currency value of Korea and Japan. In the first half of the year, the won fell about 7.1 percent against the dollar, while the yen and the Taiwanese dollar also fell about 3.6 percent and 1.4 percent, respectively. Although there are differences in degree, the currencies of all three countries were weak. However, the direction of foreigners’ trading was divided. They sold an overwhelming number of Korean stocks.

As the KOSPI rose the most, it is not enough to explain that foreigners’ realization of profits was large. The KOSPI rose about 101 percent in the first half of the year. The rate of increase was significantly higher than about 59% of Taiwan’s household index and 39% of Japan’s Nikkei 225. The difference in the index’s growth rate between South Korea and Taiwan was 1.7 times, while the difference in net foreign selling was 3.3 times.

사진 확대 [Designer Kim Hyungkyu]

The reason why foreigners sold a lot of Korean stocks is that it is difficult to be sure how long the memory boom will continue. Samsung Electronics and SK Hynix’s profits soar when memory prices rise, but profits also decrease rapidly when prices fall. It is difficult for foreigners to hold such companies for a long time as a large proportion, and if the stock price rises a lot, they try to determine the valuation profit before the business turns around.

Even in the same semiconductor stock, volatility is Korea > Taiwan > Japan

In particular, the reason why foreigners do not believe in the profits of Korean memory companies for a long time is that memory prices shake the order volume together. When demand for DRAM and NAND exceeds supply, prices rise, and customers increase orders to secure inventory before prices rise further. Samsung Electronics and SK Hynix will sell more products at higher prices.

사진 확대 [Designer Kim Hyungkyu]

With production lines already in place, depreciation costs and R&D costs do not increase equally even if sales increase. When prices and shipments rise together, a significant amount of increased sales remain as profits. This is why profits of the two companies grow faster than sales during the memory boom.

The same process goes the other way in a recession. When supply exceeds demand, prices fall, and customers reduce orders and inventory while waiting for further declines. Prices and shipments decrease at the same time, but the cost of factories and equipment remains the same. If profits decrease faster than sales and prices continue to fall, it will turn into a large deficit.

사진 확대 South Korea, Japan, Taiwan Semiconductor Industries [Designer Kim Hyungkyu]

The full text of the article is available on Maeil Business Newspaper’s premium financial content platform Maekyung Plus. Search ‘Maekyung Plus’ on Naver or take a QR code below with your smartphone to connect.

사진 확대