The two major South Korean semiconductor stocks that had been driving a market rout rebounded together after three sessions. Bargain hunting following the more than 10% plunge over the previous two days, combined with the relatively resilient performance of U.S. semiconductor stocks overnight, appears to have positively influenced investor sentiment.
Based on pre-market trading on the alternative exchange Nextrade (NXT) and early regular-session activity on the Korea Exchange on July 21, Samsung Electronics (005930.KS) and SK Hynix (000660.KS) both showed strength of 1% to 2%.
In regular trading, Samsung Electronics was changing hands at 259,000 won (approximately $175.32), up 2.25% from the previous session as of 9:14 a.m. Earlier, in Nextrade pre-market trading (as of 8:20 a.m.), the stock had risen 1.23% to 247,000 won (approximately $167.20). SK Hynix gained 1.02% to 1,782,000 won (approximately $1,206.27) in pre-market trading and maintained modest gains in the regular session, trading up 0.23% at 1,768,000 won (approximately $1,196.79).
Analysts attributed the rebound primarily to bargain hunting after both stocks tumbled more than 4% in regular trading on July 20. In fact, the KOSPI had plunged 10.54% over just two sessions — July 16 and July 20 — sliding from 7,284.41 to 6,516.27, while Samsung Electronics and SK Hynix cratered 8.77% and 11.53%, respectively, over the same period.
Overnight sentiment in U.S. markets also proved favorable for semiconductor stocks. On July 20 (local time), all three major New York indexes closed lower — the Dow Jones Industrial Average (-0.59%), S&P 500 (-0.19%), and Nasdaq Composite (-0.05%) — as Middle East geopolitical risks resurfaced. However, the semiconductor sector held up relatively well on bargain buying. The Philadelphia Semiconductor Index rose 0.60%, with major chip stocks advancing across the board, including AMD (1.58%), Broadcom (1.98%), Micron (1.94%), Intel (2.13%), and SanDisk (2.67%).
SK Hynix’s American Depositary Receipts (ADRs), however, showed a divergence from the underlying shares. The ADRs surged more than 6% intraday before surrendering all gains to close down 1.86%. Market participants interpreted this as an attempted rebound driven by bargain hunting after the ADRs had plunged 9.00% and 13.69% on July 15 and July 16, respectively, while also reflecting still-unstable supply-demand dynamics.
“South Korea’s stock market will attempt a rebound as bargain hunting flows in on the perception that major sectors like semiconductors have been oversold, despite U.S.-Iran geopolitical uncertainties,” said Han Ji-young, an analyst at Kiwoom Securities. “Foreign investor supply-demand conditions are also expected to improve, helped by the rebound in U.S. semiconductor stocks and easing pressure from the won-dollar exchange rate.”
But it is too early for complacency. Even as the KOSPI opened higher, the index surrendered most of its early gains and slipped toward the 6,450 level, extending the mixed tone at the index level. The KOSDAQ also reversed from an early advance to trade down around 2%, sinking below the 740 mark. On the main KOSPI board, retail investors were net buyers of 219 billion won (approximately $148.2 million), while institutional investors were net sellers of 220 billion won (approximately $148.9 million). Foreign investors oscillated between net buying and net selling in an unstable pattern.
The prevailing view is that market volatility is likely to persist for some time. So far this month, sell-side and buy-side circuit breakers have been triggered a combined nine times on the KOSPI and seven times on the KOSDAQ, while broader market circuit breakers have been activated twice. “Market concentration remains an issue, with Samsung Electronics and SK Hynix together accounting for more than half of the KOSPI’s total market capitalization,” Han noted. “The fact that single-stock leveraged trading volume represents 40% of total KOSPI trading value is another factor prolonging this volatile market environment.”
Middle East-driven geopolitical risks also remain an active concern. Following casualties at a U.S. military base in Jordan, military tensions between the U.S. and Iran have escalated, sending Brent crude prices surging to $90.85 per barrel — the highest level in about a month. Such a spike in oil prices could stoke inflation concerns and weigh on broader equity markets.
“At this juncture, from a valuation, earnings, and supply-demand perspective, we are in a zone where a bottoming process and subsequent rebound can be expected rather than further downside,” Han said. “Investors should prioritize a strategy of phased buying to gradually increase exposure, centered on semiconductors where the recent sell-off has been excessive.”