AI Stock Market Darling Plummets – South Korea's Stock Market Crashes
Following the attacks on Iran
The Korean stock index, the KOSPI, had fallen so sharply at one point that trading even had to be suspended. (File photo)
Keystone
The South Korean stock market started the new week with a sharp decline. Tech heavyweights such as Samsung Electronics and SK Hynix, in particular, came under massive pressure. The reasons cited include the recent U.S. attacks on Iran, rising oil prices, and profit-taking.
Here’s what it’s all about
- South Korea’s leading index, the KOSPI, lost nearly 8 percent of its value at one point.
- Samsung Electronics and chipmaker SK Hynix saw double-digit declines in their stock prices.
- The markets were weighed down by the escalation in the Middle East, higher oil prices, and profit-taking.
South Korea’s stock market started the trading week with a sharp decline. The benchmark Kospi index had fallen by nearly 8 percent as of half an hour before the market closed.
Samsung Electronics, the country’s largest publicly traded company by market capitalization, fell by more than 10 percent at the same time.
The share price of chipmaker SK Hynix has fallen the most sharply. After the market leader in so-called HBM (High Bandwidth Memory) chips raised $26.5 billion in an initial public offering on the U.S. Nasdaq stock exchange on Friday, SK Hynix’s stock price was down more than 13 percent on Monday.
Japan’s leading index, the Nikkei 225, fell by about 1.9 percent. China’s CSI 300, which tracks the country’s leading companies, fell by 1.4 percent. Hong Kong’s Hang Seng Index, on the other hand, rose slightly by 0.2 percent.
Higher oil prices and profit-taking are weighing on the market
The price drops are also linked to the recent waves of U.S. attacks on Iran and the sharp rise in oil prices. A barrel (159 liters) of Brent crude for September delivery is currently trading at $79.50, an increase of about 4.5 percent compared to the last trading day.
In the case of SK Hynix, analysts say a technical price correction is also playing a significant role: After the chipmaker’s stock price more than quadrupled this year through the end of June, investors are now increasingly taking profits. South Korea’s Kospi is considered extremely volatile
South Korea’s leading index, the KOSPI, had become the symbol of the AI rally with a spectacular run to new record highs through mid-June. Since then, however, it has lost a little more than a quarter of its value. Despite the decline since its record high, the KOSPI is still up more than 60 percent so far this year.
Kospi Has Been Very Volatile Lately
Overall, however, the Kospi is extremely volatile. Both price rallies and slumps are particularly pronounced in the South Korean index. This is partly due to its focus on a small number of large companies, particularly the chip manufacturers Samsung Electronics and SK Hynix.
On the other hand, the South Korean stock market is heavily influenced by international investors, who withdraw capital relatively quickly from this market—classified by MSCI as an emerging market—during periods of heightened uncertainty.