As the KOSPI market closed with a near 10% plunge today (June 23), a brokerage report that predicted the end of the domestic stock market's bull run is receiving renewed attention.
This afternoon, the KOSPI market experienced a sharp decline due to heavy profit-taking by foreign investors, triggering a circuit breaker that temporarily halted trading.
The KOSPI eventually closed at 8,203.84, down 9.99% from the previous trading day.
Samsung Electronics and SK Hynix, which had been leading the market boom, both plummeted by over 12%, driving the downward trend.
Amid this sharp decline, a report published last month by Hana Securities is being re-examined by the market.
At the time, Lee Jae-man, an analyst at Hana Securities, analyzed in the report that "the signal for the end of the current bull market, which is based on corporate earnings growth, is the moment when SK Hynix's market capitalization surpasses that of Samsung Electronics."
In fact, yesterday, driven by a surge in its stock price, SK Hynix's market capitalization overtook Samsung Electronics for the first time in 25 years and 7 months since November 2000, claiming the top spot.
The report pointed out that a shift in market cap leadership driven solely by expectations and stock overheating, without a reversal in actual earnings scale, is a sign of a market bubble peak and a precursor to a collapse.
As an example, it cited the 2000 dot-com bubble, when Cisco Systems surpassed Microsoft and GE to become the top company by market cap regardless of net profit, followed by the NASDAQ index entering a downward trend.
Currently, the brokerage industry projects Samsung Electronics' operating profit for next year to be approximately 363 trillion won, significantly higher than the 263 trillion won projected for SK Hynix.
The implication is that a market cap reversal occurring due to momentum without a change in fundamentals can ultimately serve as a signal for the end of an index rally.
However, some in the brokerage industry are also analyzing that since the KOSPI's forward price-to-earnings ratio (PER) is currently at the 8x level, which is stable in terms of valuation, this correction should be viewed as a process of resolving short-term overheating rather than a damage to the overall trend.
Reported by Lee Hyeon-yeong | Video by Choi Gang-san | Graphics by Yang Hye-min | Produced by SBS Digital News
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