KOSPI Drops Below 6,500 Amid Rising US Bond Yields; SK Hynix Announces 40 Trillion Won Share Buyback and Retirement

[Anchor]

As yields on U.S. Treasury bonds—long considered a quintessential safe-haven asset—surged, the South Korean stock market experienced heavy turbulence today (August 19). After the regular trading session closed, SK Hynix announced plans to purchase and retire a record 40 trillion won worth of treasury shares, drawing significant attention to how it will impact the market.

Reporter Kim Hye-min has the details.

[Reporter]

The primary reason behind the KOSPI plunging 5.8% today and falling below the 6,500 mark is cited as the sharp surge in U.S. Treasury yields.

The yield on the 10-year U.S. Treasury note climbed to 4.72%, while the 30-year bond yield soared to 5.3%.

Notably, the 30-year Treasury yield is at its highest level since 2007.

With the U.S. fiscal deficit remaining severe and Treasury issuance continuing, investors are demanding higher yields.

Currently, the U.S. national debt is nearing 40 trillion dollars.

In addition, U.S. big tech companies such as Amazon issued 194 billion dollars worth of corporate bonds—79% more than last year—which is also pushing U.S. Treasury yields upward.

[Chang Bo-sung / Head of Macroeconomic Finance Research, Korea Capital Market Institute: As big tech companies issued corporate bonds with maturities exceeding 15 years, demand for U.S. Treasuries was substituted by demand for corporate bonds, which also drove up U.S. Treasury yields.]

Amid concerns that rising interest rates will directly translate into heavier investment cost burdens, the shock rippled from the overnight U.S. market to the domestic market.

Foreign investors net-sold 3.5 trillion won, causing Samsung Electronics to plummet by 7.8% and SK Hynix by 9.7%.

While concerns linger that Treasury yields could enter a secular upward trend, expectations are also growing that large-scale shareholder return policies by domestic semiconductor companies could serve as a catalyst for a rebound.

Following the close of the regular session today, Hynix disclosed plans to acquire and retire 40 trillion won worth of treasury shares, marking the largest scale ever for a company listed on the domestic exchange.

The company also announced that it will return more than 50% of its cumulative free cash flow over the next three years to shareholders, including expanded dividends.

Following the disclosure, SK Hynix shares recovered most of today's losses in after-hours trading on an alternative trading system.

[Park Seok-hyun / Researcher, Woori Bank: How much of a rebound can be achieved will likely serve as a primary test, and we will need to see how Hynix shares react in tomorrow's main trading session.]

Expectations are also emerging that Samsung Electronics will announce its shareholder return policy as early as this month, meaning the broader domestic KOSPI, which features a high weighting of the two semiconductor giants, is projected to be significantly impacted.

(Photo: Yonhap News) Reported by Kim Hak-mo | Video by Kim Jun-hee | Graphics by Kim Min-young
※ Please note: This article was translated by AI and may contain errors.