7,000-Point Collapse Shocks Market: "Not a Bear Phase... Still Time to Buy Leading Stocks"

Hana Securities: "Repricing Driven by Supply-Demand Issues"
"Semiconductor Profit Direction Remains Intact"

Regarding the approximately 9% plunge of the KOSPI on July 13, which pushed the index below the 7,000-point mark, Hana Securities diagnosed the situation as being closer to a repricing process where prices and supply-demand dynamics are finding a new equilibrium after an initial rally, rather than the beginning of a bear market. The analysis suggests that, since the direction of semiconductor profits has not yet turned downward, a strategy focused on leading stocks remains valid.

Dooeon Kim, a researcher at Hana Securities, explained, "Foreign investor selling, National Pension Service rebalancing, and a slowdown in individual liquidity (as evidenced by a decrease in customer deposits) are delaying the index's recovery, but the direction of semiconductor profits has not shifted yet." He added, "The current problem in the market is more about supply-demand dynamics than profits."

He also stated that concerns about a slowdown in AI demand for Meta-related applications should not be interpreted as a complete end of AI demand. What the market is now questioning is not the investment size, but the pace of investment recovery—indicating that this is a shift in valuation methodology rather than a disappearance of demand.

He further assessed that the semiconductor industry is not at its peak. According to the World Semiconductor Trade Statistics (WSTS), while 2026 may mark the peak growth rate, the absolute size of the market is expected to expand again in 2027, with only the growth rate slowing down.

He pointed to SK hynix American Depositary Receipts (ADR) as the first test case for confirming this gap. The ADR offering attracted approximately 171.5 billion dollars in orders, resulting in a competition ratio seven times the size of the issuance, and the offering price was set about 2.9% higher than the translated price of the previous Seoul share. Unlike typical overseas rights offerings, which are usually issued at a discount, this was successfully issued at a premium.

Kim analyzed, "This is a signal that U.S. investors are beginning to view SK hynix not just as a memory cycle stock, but as an AI infrastructure asset centered on High Bandwidth Memory (HBM)."

He also commented that the conditions are in place for the premium to be sustained. The ADR's ratio to common shares is about 2.4%, significantly lower than TSMC ADR's roughly 20%, meaning the initial distribution volume is limited, and the conversion process between common shares and ADRs is complex, making arbitrage trading difficult to execute immediately.

He presented three indicators to judge the current market phase: ▲the SK hynix ADR premium, ▲memory prices and profit estimates, and ▲the bottoming out of customer deposits.

Kim stated, "Prices already reflect a bear market, but profits do not yet indicate a bear phase. If the ADR premium remains stable and memory prices and profit forecasts are not undermined, it is necessary to maintain portfolio weightings centered on major semiconductor stocks."

Another Black Monday: SK hynix Down 15%—Largest Drop Ever

On the 13th, with the KOSPI plunging about 9% and falling below the 7,000-point level, an employee is working at the dealing room of Hana Bank headquarters in Jung-gu, Seoul. Photo by Yonhap News.

On this day, the KOSPI closed at 6,806.93, down 669.01 points (8.95%). The index started at 7,412.03, down 63.91 points (0.85%), briefly rebounded by 0.71% in early trading, but soon reversed direction and extended its losses. At one point, it fell to as low as 6,783.43, a drop of 9.26%.

The closing drop of 669.01 points marks the fourth-largest decline in history, while the intraday fluctuation of 745.64 points is the third-largest ever. This is the first time in about two months that the KOSPI has fallen below the 7,000-point mark since surpassing it on May 6. Specifically, it took 68 days, or 46 trading sessions, after crossing the 7,000-point threshold. Compared to the intraday peak of 9,385.59 on June 19, the index has plunged by a staggering 27.4% (2,578.66 points).

Due to the sharp decline, a sell-sidecar was triggered at 10:34 a.m., and a circuit breaker was activated at 1:28 p.m., halting trading for 20 minutes. As a result, the KOSPI's total market capitalization dropped from 6,118.6042 trillion won in the previous session to 5,571.3559 trillion won.

The so-called "KOSPI Top Two," Samsung Electronics and SK hynix, plummeted on concerns about the semiconductor peak-out, sending shockwaves through the entire index. Samsung Electronics ended the day at 2,545,000 won, down 10.70%, while SK hynix finished at 18,450,000 won, down 15.37%. The decline in SK hynix shares was the largest on record, causing its market capitalization to shrink to 1,314.9358 trillion won and dropping it out of the 1 trillion dollar club.

By investor type, institutions and foreign investors were net sellers, offloading 2.2193 trillion won and 1.7047 trillion won worth of stocks, respectively, dragging the index down. Individual investors, on the other hand, were net buyers, snapping up 3.8822 trillion won and providing some support.

In the KOSPI 200 futures market, foreign investors showed a net buying advantage of 1.3183 trillion won, while institutions and individuals showed net selling of 1.17 trillion won and 1.5 billion won, respectively. As of 3:30 p.m., the won-dollar exchange rate in the Seoul foreign exchange market stood at 1,503.4 won, up 2.0 won from the previous session.

This content was produced with the assistance of AI translation services.