The Kospi index crashed more than 8% during intraday trading on July 7, triggering South Korea’s sixth circuit breaker of the year. Samsung Electronics and SK Hynix led the rout, both plunging 9% to 10%. The meltdown came despite Samsung releasing its highest-ever quarterly profit before the market opened\u2014a figure that exceeded consensus estimates\u2014as a combination of “buy the rumor, sell the fact” profit-taking and escalating fears of overinvestment in artificial intelligence sent the market into a panic.<\/p>\n
According to the Korea Exchange, a Level 1 circuit breaker was activated on the KOSPI market at 1:51:33 p.m., halting trading in all stocks for 20 minutes. At the time of the halt, the Kospi stood at 7,401.56, down 649.77 points, or 8.07%, from the previous session. This marked the 12th circuit breaker in South Korean history and the first in seven trading days since June 26. Earlier, at 10:23 a.m., a sell-side sidecar was triggered, suspending program sell orders for five minutes after Kospi 200 futures fell more than 5%.<\/p>\n
The day’s collapse was driven by a coordinated sell-off from foreign and institutional investors. At the time the circuit breaker was triggered, foreigners had net sold approximately 3.35 trillion won (approximately $2.2 billion) on the main KOSPI board, while institutions offloaded a net 237 billion won (approximately $155.4 million). Retail investors stepped in as the sole buyers, snapping up a net 3.53 trillion won (approximately $2.3 billion) in an attempt to defend the downside, but they were overwhelmed by the deluge of sell orders. Samsung Electronics and SK Hynix bore the brunt of the selling, tumbling 9.75% and 10.58%, respectively. SK Square plunged 13.11% and Samsung Electro-Mechanics dropped 11.82%, both posting double-digit losses.<\/p>\n
On the surface, the sell-off was triggered by Samsung’s record results failing to clear an impossibly high bar. The company reported preliminary second-quarter operating profit of 89.4 trillion won (approximately $58.6 billion), a staggering 1,810% surge from a year earlier and above the market forecast of 84 trillion won (approximately $55.1 billion). However, revenue of 171 trillion won fell slightly short of some whisper numbers, stoking fears that the cycle has peaked. “Expectations matter,” said Kim Seok-hwan, an analyst at Mirae Asset Securities. “The level that market participants had priced in was far higher than even the official consensus, so the stock fell despite delivering a surprise.”<\/p>\n
Compounding the pressure, fundamental doubts about the sustainability of AI-related capital expenditures have resurfaced, rapidly freezing investor sentiment. “Recently highlighted concerns about AI investment tripped up the market,” said Jeong Yong-taek, chief economist at IBK Investment & Securities. “Anxiety is growing that profitability could become excessive or that investment plans could face disruptions.” Notably, the rout was isolated to South Korean markets. The Philadelphia Semiconductor Index rose 2.17% at the same time, and Taiwan’s TAIEX gained 0.74%, underscoring the localized nature of the panic.<\/p>\n
Market experts were unanimous in attributing the crash to liquidity instability and a high-volatility environment rather than deteriorating fundamentals. “Exhausted investors are misinterpreting price drops driven by simple supply-and-demand issues as fundamental deterioration,” noted Han Ji-young, an analyst at Kiwoom Securities. Indeed, trading volumes in leveraged and inverse single-stock products tied to Samsung Electronics and SK Hynix have surged recently, amplifying market swings. The proportion of trading value in these products jumped from 16.1% in June to 24.0% in July.<\/p>\n
Despite the turmoil, the medium-to-long-term outlook for the semiconductor industry remains robust. “Due to physical capacity constraints, the semiconductor market is in a state of structural undersupply that will persist at least through the fourth quarter of next year, with supply unable to catch up with demand,” said Kim Sun-woo, an analyst at Meritz Securities, explaining that excessive market caution, not earnings deterioration, magnified the decline. Ryu Hyung-geun, an analyst at Daishin Securities, also predicted that “share prices will soon find their footing and stage a powerful rally,” adding that “a favorable environment is in place for the largest-ever shareholder return policy to gain momentum after third-quarter earnings are announced.”<\/p>\n
Meanwhile, market anxiety persisted even after the circuit breaker was lifted. A Level 2 circuit breaker would be triggered if the Kospi falls 15% or more from the previous close, while a Level 3 halt\u2014shutting down trading for the remainder of the day\u2014would kick in at a 20% decline. The Kospi 200 Volatility Index (VKOSPI) spiked to 85.88 during the session, reflecting extreme fear. The tech-heavy Kosdaq index closed down 3.64% at 816.21, while the won-dollar exchange rate settled at 1,524.20 won (approximately $0.9992), down 5.8 won (approximately $0.0038).<\/p>\n","protected":false},"excerpt":{"rendered":"The Kospi index crashed more than 8% during intraday trading on July 7, triggering South Korea’s sixth circuit…\n","protected":false},"author":2,"featured_media":77570,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[457],"tags":[26666,896,337,335,864,41970,276,41969,14543,1136,275],"class_list":["post-77569","post","type-post","status-publish","format-standard","has-post-thumbnail","category-korea-exchange","tag-circuit-breaker","tag-foreign-investors","tag-korea-exchange","tag-kospi","tag-krx","tag-panic-selling","tag-samsung-electronics","tag-samsung-electronics-q2-preliminary-earnings","tag-sell-side-sidecar","tag-semiconductors","tag-sk-hynix"],"_links":{"self":[{"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/posts\/77569","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=77569"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/posts\/77569\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/media\/77570"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/media?parent=77569"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/categories?post=77569"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/tags?post=77569"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}