[Anchor]

The South Korean stock market saw a particularly sharp decline today (June 23) compared to other Asian nations. Various interpretations are emerging as to whether this marks the beginning of a market correction after a significant rally, or if it is merely a temporary wave of profit-taking.

Reporter Kim Hye-min takes a closer look.

[Reporter]

The "AI peak theory," which resurfaces whenever major U.S. companies announce their earnings, has emerged once again.

Concerns over high costs and intensifying competition have dampened investor sentiment, leading to a broad decline in big tech stocks.

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

With SK Hynix and Samsung Electronics having surged 42% and 16% respectively over the past eight trading days, the desire to lock in profits has grown. Since these two stocks account for more than half of the total market capitalization, their volatility has shaken the entire market.

[Lee Hyo-seob, Head of Financial Industry Research at Korea Capital Market Institute: There was an expectation that the U.S. ADR (American Depositary Receipt) listing for SK Hynix would be announced early this morning, but it was delayed. Additionally, the inclusion of the KOSPI in the MSCI developed market index is now 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 in the KOSPI over the past five trading days.

Some analysts suggest that the market decline is driven by the National Pension Service selling stocks in advance, as it is required 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 phase has begun.

After SK Hynix's market capitalization surpassed Samsung Electronics yesterday and then plummeted today, a report analyzing that "a market cap crossover is one of the signals for the end of a bull market" gained attention. However, the researcher who authored it also stated that today's decline is likely a short-term correction.

[Lee Jae-man, Researcher at Hana Securities: (The market cap crossover) served as an implication and signal that the index was showing signs of short-term overheating. It appears to be 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 upcoming quarterly earnings report from U.S.-based Micron on June 24 and the prevailing atmosphere regarding interest rates.

(Reported by Kim Hye-min | Video by Lim Woo-sik | Video Editing by Jung Yong-hwa | Graphics by Jo Soo-in and Lee Jong-jung)