Semiconductor-Heavy Market Sees Sharp Drop: Correction or Profit-Taking?

[Anchor]

The South Korean stock market, which is heavily concentrated in large-cap semiconductor stocks, saw a significantly sharper decline yesterday (June 23) compared to other Asian markets.

As the market has risen substantially, various interpretations are emerging: is this the beginning of a correction, or is it simply a move to lock in profits before another rally? Kim Hye-min reports.

[Reporter]

The "AI peak" theory, which resurfaces with every earnings announcement from major U.S. companies, has appeared once again.

Concerns over high costs and intensifying competition have dampened investor sentiment, causing shares of big tech companies to fall across the board.

The South Korean market saw a much steeper decline compared to Japan, which fell 3.5%, and Taiwan, which dropped 1.3%.

With SK Hynix surging 42% and Samsung Electronics rising 16% over the past eight trading sessions, the desire to realize gains has grown. Because these two stocks account for more than half of the total market capitalization, their volatility shook the entire market.

[Lee Hyo-seob, Head of Financial Industry Research, Korea Capital Market Institute: There was an expectation that the listing of SK Hynix's American Depositary Receipts (ADR) would be announced early this morning, but it was delayed. Furthermore, the inclusion of the KOSPI in the MSCI Developed Markets Index is effectively difficult to achieve this year.]

Recent selling by pension funds is also notable.

Pension funds, including the National Pension Service, have recorded a net sell-off of over 1.5 trillion won on the KOSPI over the past five trading sessions.

Some interpret this as the market falling because the National Pension Service is selling stocks in advance to meet its requirement to reduce its domestic equity allocation starting next month.

However, many in the market believe it is too early to conclude that a full-scale correction has begun.

After SK Hynix’s market cap surpassed that of Samsung Electronics, the stock plummeted, and a report analyzing that "a market cap crossover is one of the signals that a bull market is ending" drew attention. However, the researcher behind the report also stated that the decline is likely a short-term correction.

[Lee Jae-man, Researcher at Hana Securities: (The market cap crossover) served as an implication and a signal that the index was showing signs of short-term overheating. It is more of a correction for the areas where the gap had widened significantly.]

In the short term, the direction of the semiconductor bull market is expected to become clearer amid the tug-of-war between the quarterly earnings report from U.S.-based Micron, scheduled for today (June 24), and the prevailing interest rate environment.

(Video reporting: Lim Woo-sik | Video editing: Jung Yong-hwa | Design: Jo Soo-in, Lee Jong-jung)
※ Please note: This article was translated by AI and may contain errors.