Nikkei 225 Falls Below 62,000 for First Time in Two Months as Semiconductor Slump and South Korea’s Plunge Ripple Through Markets<\/p>\n
The Nikkei 225 (225 issues) extended its sharp decline on the Tokyo Stock Exchange on July 29, closing at 61,434.19, down 930.73 points (1.49%) from the previous session. The closing level fell below the psychologically significant 62,000 threshold for the first time since late May, marking a roughly two-month low. The sell-off followed weakness in U.S. semiconductor stocks from the prior session, with AI and semiconductor-related names\u2014which carry heavy index weighting\u2014sold across the board in Tokyo. In the afternoon, news of a sharp plunge in South Korea’s semiconductor-heavy equity market amplified the decline, with the Nikkei briefly extending its intraday loss to more than 1,900 points.<\/p>\n
Meanwhile, easing concerns over Middle East tensions helped stabilize crude oil futures prices, prompting buybacks in some domestic-demand and cyclical stocks, including automakers and service-sector companies. More than 60% of all stocks on the TSE Prime section advanced, highlighting a stark market bifurcation. The Tokyo Stock Price Index (TOPIX) edged up 10.44 points (0.26%) to 3,974.03, posting a modest rebound.<\/p>\n
South Korea’s Contagion Sell-Off Weighs on Sentiment<\/p>\n
The sharp plunge in South Korea’s KOSPI index amplified the afternoon sell-off in Tokyo. After recording a historic 10.84% decline the previous day, the KOSPI initially rebounded in early trading on July 29, but selling re-accelerated following SK Hynix’s disappointing earnings and hawkish comments from Bank of Korea Governor Shin Hyun-song.<\/p>\n
The index briefly plummeted 760.89 points (12.63%) to 5,262.77, triggering a market-wide circuit breaker\u2014the ninth such halt this year. The KOSPI closed at 5,663.24, down 360.42 points (5.98%), sinking to its lowest level since early April. This marks the first time in South Korean stock market history that circuit breakers have been triggered on two consecutive trading days.<\/p>\n
SK Hynix Earnings: “Record-Breaking but Insufficient”<\/p>\n
SK Hynix led the sell-off. The company reported second-quarter revenue of \u20a979.32 trillion (approximately $54.8 billion), up 257% year-on-year, and operating profit of \u20a960.54 trillion (approximately $41.8 billion), up 557%, both setting new all-time highs. However, the results fell short of market expectations, which had forecast revenue of \u20a983.85 trillion (approximately $57.9 billion) and operating profit of \u20a964.22 trillion (approximately $44.4 billion), triggering a wave of disappointment-driven selling as investors deemed the results “record-breaking but insufficient.”<\/p>\n
SK Hynix shares briefly plunged more than 17% intraday before closing down 9.61%. The stock has now fallen more than 53% from its historic peak. Samsung Electronics also closed 5.23% lower, with the two semiconductor heavyweights dragging the index sharply lower.<\/p>\n
Market participants are increasingly wary of SK Hynix’s potential expansion of capital expenditure to the \u20a940 trillion to \u20a950 trillion range (approximately $34.5 billion) in 2026. With Micron Technology, Samsung Electronics, and China’s CXMT all ramping up production, concerns are mounting over potential oversupply and price declines in high-bandwidth memory (HBM) and DRAM markets.<\/p>\n
South Korean Tightening and Leverage Unwinding<\/p>\n
The turmoil in South Korean markets has been significantly exacerbated by the unwinding of leveraged positions held by retail investors. Bank of Korea Governor Shin Hyun-song stated that “inflation may remain above the 2% target for an extended period,” referencing the need for additional rate hikes. The prospect of further monetary tightening further chilled investor sentiment.<\/p>\n
South Korean authorities have accelerated the implementation of regulations on leveraged ETF trading by retail investors, planning to raise the minimum deposit requirement to \u20a930 million (approximately $20,725) starting July 31. According to Morgan Stanley estimates, deleveraging in South Korea’s domestic leveraged ETFs has progressed approximately 75%, but the decline in total assets under management includes not only outright redemptions but also declines in net asset values, suggesting that risk reduction at the individual investor account level remains a work in progress.<\/p>\n
Sharp Sector Divergence in Japanese Markets<\/p>\n
Turning back to Tokyo, selling in semiconductor-related stocks was relentless. SoftBank Group (9984.T) fell 6.1%, while semiconductor equipment and component manufacturers including Tokyo Electron (8035.T), SCREEN Holdings (7735.T), and Renesas Electronics (6723.T) posted steep declines across the board. Lasertec (6920.T) and Disco (6146.T) also came under selling pressure. Memory maker Kioxia (285A.T) dropped 8%, while MLCC manufacturers Taiyo Yuden (6976.T) and Murata Manufacturing (6981.T) recorded near double-digit losses.<\/p>\n
In contrast, automakers and service-sector stocks attracted buying as crude oil prices stabilized. The fact that advancing issues outnumbered decliners by more than 60% on the TSE Prime section underscores how the index’s decline was concentrated in a handful of high-priced technology stocks. A strategist at a major securities firm noted that “the market is likely to remain driven by price movements in AI and semiconductor-related names,” with caution voiced over near-term instability.<\/p>\n
In the U.S. market, the Philadelphia Semiconductor Index (SOX) fell 4.49% the previous day, with some analysts suggesting it has entered a “bear market,” signaling a correction phase. Market participants point to a combination of concerns weighing on both domestic and international investor sentiment, including the sustainability of AI investment, the supply-demand balance in memory semiconductors, and the risk of valuation corrections for high-multiple stocks.<\/p>\n
With both the U.S. Federal Reserve and the Bank of Japan scheduled to hold monetary policy meetings this week, a wait-and-see stance has also spread as investors seek to gauge the policy direction of both central banks. Combined with ongoing uncertainty over the Middle East situation, risk-averse positioning among investors may persist in the near term.<\/p>\n","protected":false},"excerpt":{"rendered":"Nikkei 225 Falls Below 62,000 for First Time in Two Months as Semiconductor Slump and South Korea’s Plunge…\n","protected":false},"author":2,"featured_media":102830,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[456],"tags":[53239,845,846,335,14212,19969,275,11754,14614,53240,53241],"class_list":["post-102829","post","type-post","status-publish","format-standard","has-post-thumbnail","category-bank-of-korea","tag-ai-and-semiconductor-related-stocks","tag-bank-of-korea","tag-bok","tag-kospi","tag-middle-east-tensions","tag-nikkei-225","tag-sk-hynix","tag-softbank-group","tag-tokyo-stock-exchange","tag-topix","tag-u-s-semiconductor-stocks"],"_links":{"self":[{"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/posts\/102829","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/comments?post=102829"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/posts\/102829\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/media\/102830"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/media?parent=102829"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/categories?post=102829"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/tags?post=102829"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}