15 days since being eliminated from the World Cup, South Korea’s national fortune stock crashed

By @Xiao Bing@

June 25 may be the most unforgettable day for Koreans in 2026.

That night at Monterrey Stadium, the South Korea team could have advanced with a draw against South Africa, but they lost 0–1 instead. Son Heung-min came on as a substitute, and he touched the ball 29 times across the match.

Three days later, the Democratic Republic of the Congo scored three unanswered goals to overturn Uzbekistan, and after waiting 71 hours, South Korea—squeezed out of the Round of 32—ended their 12th World Cup journey in a way that was nearly humiliating.

Also on June 25, SK Hynix’s stock price surged to a record high. The national pride carried away by football was repaid with double the “interest.” No one expected that this day would be both the endpoint of Korean football and the peak of SK’s share-price curve.

Eighteen trading days later, today, July 13 at 9:35 a.m., the Korea Exchange activated the circuit breaker mechanism. The intraday decline of KOSPI widened to 6%, and SK Hynix briefly crashed 12%, falling below the 2 million won mark and hitting a new low since June 11—down 33% from the historical high on June 25.

That double-long Hynix ETF in Hong Kong fell more than 22% in a single day.

This summer, the real “national team” for Koreans was routed even faster than the football team.

From coronation to breach—only took three weeks

To understand the ferocity of this selloff, you first have to understand the madness of the prior rally.

Over the past 12 months, SK Hynix’s shares listed in Seoul have risen by about 850%, and its market capitalization has surpassed $1 trillion.

On June 22, it set a record closing price. Its market cap briefly surpassed Samsung Electronics, ending the latter’s decades-long reign as Korea’s market-cap king. With global HBM market share of more than 56%, exclusive supply of about 70% of orders for Nvidia’s new-generation AI servers—long-term contracts extending to 2028—and a first-quarter operating margin of 72%, higher than Nvidia’s.

Capital markets can’t find anything more pure as an AI storage play, and Korea can’t find a more proud national calling card than it.

A segment circulating on Zhihu is a young person in Seoul describing her life (a joke/skit): it was the best summer since she became an adult. She found a job that year, put all her salary into the stock market, earned the equivalent of five years’ wages, and walking the streets of Seoul gave her the illusion of a human golden age.

The illusion of a golden age lasted less than a month.

News that Meta plans to sell AI compute power to the outside world surfaced in early July. Buyers’ interpretation was simple and crude: an ultra-large-scale manufacturer has started selling “excess compute,” which suggests the market may have built too much. Morgan Stanley’s chief U.S. equities strategist then recommended trimming semiconductor holdings, and the Philadelphia Semiconductor Index has cumulatively fallen by more than 13% since July began. Once the news transmitted to Seoul on the first trading day, the KOSPI plunged nearly 8%. SK Hynix fell more than 12% in the day, and market capitalization evaporated by more than $100 billion overnight.

Over the next two weeks, this market entered a kind of frenzy:

On July 3, a deep V rebound lifted the KOSPI by more than 5%, pushing it high enough to trigger the circuit breaker, and automated buying was paused.

On July 7 and July 8, two consecutive days sank to the circuit breaker. By the close on July 8, it had retreated more than 20% from the high on June 19, officially falling into a technical bear market.

This year, SK Hynix has already had more than 50 trading days where its daily move exceeded 5%. Last year, the full-year number was 37.

When rising triggers circuit breakers and falling also triggers circuit breakers, the number of “sidecar” mechanisms and circuit-breaker activations the Korean stock market triggered in the first half of this year has both broken the historical record set in the 2008 financial crisis year.

The day that best explains everything was July 7.

That day, Samsung Electronics released a guidance update for its second-quarter results. Operating profit was 89.4 trillion won, up 1,810% year over year—far above market expectations, and even exceeding its full-year 2025 profit.

The strongest quarterly results in history were met with a sharp stock price drop and a broad market circuit breaker.

When a stock’s price has already discounted far beyond the profits in the current income statement, no matter how beautiful the earnings are, you’re still answering last week’s exam. The new exam the market holds asks different questions: will AI infrastructure be overheating? Can chipmakers’ massive capital expenditures still be recouped?

Champagne on Nasdaq, the bill sent back to Seoul

In the same week that Seoul’s market sank into a bear market, SK Hynix pulled off a landmark event for the capital markets in New York.

On July 10, SK Hynix’s ADR listed on Nasdaq. The offering price was $149, raising $26.5 billion—surpassing Alibaba’s 2014 record and becoming the largest foreign-company IPO by offer size in the U.S. history, second only to last month’s SpaceX in terms of scale.

Subscriptions were more than 7 times, with over 500 institutions participating. On its first day of trading, it opened at $170, touched a high of $177 intraday, and closed at $168.01. It jumped nearly 13% on the day. Based on the closing price, the market cap was about $1.22 trillion, overtaking Micron and taking the top spot globally for memory-chip market capitalization in one move. At the bell-ringing ceremony, CEO Kwak Ro-jeong said the global memory industry is heading toward the most severe supply shortage in history by 2027; Choi Tae-won said demand will grow exponentially in the future.

Pop the champagne in New York, mail the bill back to Seoul.

From the day preparations began, this “victory” was already bleeding the domestic market. The offering benchmark price was originally the June 23 closing price of 2,555,000 won. The share price kept sliding, forcing the benchmark down to 2,425,000 won on July 3. The fund-raising size shrank by about $1 billion. Every red bar during the pricing window was a discount applied to Nasdaq’s order book.

The issuance of 17.79 million new ordinary shares is real dilution. The new shares began trading in Seoul on July 29.

According to Reuters, the company planned to gradually convert and repatriate the more than $2.56 billion raised around July 15 back to South Korea. Hundreds of billions of dollars worth of FX-conversion demand would hit the foreign-exchange market, which had already fallen to 1,528 won per $1. Because conversion of South Korean common stock into ADR is restricted, U.S.-listed ADRs are currently trading at a premium of about 17% versus the Seoul share price. This inverted spread is like a mirror: it shows that the same asset is treated completely differently across two markets—global capital in New York is rushing to pay a premium for scarcity, while holders in Seoul are paying the price for liquidity to be drained and leverage to be unwound.

The last match that sparked the selloff this morning came from a forward-looking note on earnings from Korea’s local brokerage KIS.

The report expects SK Hynix’s second-quarter operating profit to be 60.4 trillion won, up 556% year over year, but about 8% lower than the market consensus of 65 trillion won. The reason lies in the pricing structure: HBM is locked at contracted prices through long-term supply agreements, and the contract price does not rise with short-term market conditions. When, in Q2, the spot average price of ordinary DRAM rose by about 30% quarter over quarter and NAND rose by about 50%, Hynix—which has the highest share of HBM—was actually the one that captured the least benefit in this round of price increases. Its biggest moat became a drag on the average price this quarter.

Up 556%, down 12%. At a high stock price, “good” is not good enough—worse than merely bad. The market never wants to hear “better than expected.” It only wants “better than you can imagine.”

Ants, leverage, and a runaway amplifier

With the same AI pullback, why did it turn into a chain of circuit breakers in Korea? To answer that, you need to look at this market’s skeleton.

KOSPI has more than 800 constituent stocks. Samsung Electronics plus SK Hynix together account for more than 43% of the index’s weight.

In May this year, Korea allowed single-stock leveraged ETFs. Since then, these two stocks and their derivatives accounted for as much as 84% of trading value in the Korean stock market for a time.

That two-times long Hynix ETF from Southern Asian Eastern (Southern Dongying) had assets that at one point exceeded $16 billion, and its gain within the year at one point topped 1,000%. It is the largest product of its kind globally. Some institutions estimate that for every 1% move in the market, leveraged ETFs related to Hynix generate about $9 billion in mechanical rebalancing demand. These products rebalance every day. When prices fall, they have to sell more holdings; the more they fall, the harder they sell. Around July 2, forced liquidation trades in leveraged products linked to Hynix made up a large share of the day’s trading volume in the underlying shares.

Over the past month, more than 90% of investors in Hynix leveraged ETFs are in a losing position.

The other side of leverage is retail investors.

As of the end of May, Korea’s margin financing balance exceeded 38 trillion won, setting a record high. Since the beginning of this year, foreign investors have net sold Korean equities by about $95 billion. From the day it peaked on June 19, they have kept net selling for 13 consecutive trading days. On July 7 alone, they sold 3.73 trillion won worth. In the same period, self-identified “ants” retail investors in Korea made net purchases of about $8 billion, nearly taking all the selloff on a one-for-one basis.

Institutions withdrew in an orderly manner at the top; retail piled on leverage and built positions against the trend, betting their faith on the national industry. When prices rose, national fortunes and leverage made each other stronger; when prices fell, the two trampled each other with no buffering in between.

But the long side’s cards are still on the table.

In the same report, KIS maintained a “buy more” rating with a target price of 3.8 million won. The reasoning is that once the industry shifts its structure to 3- to 5-year long-term supply agreements, the valuation anchor will switch from a single-quarter average price increase to how long high-profit earning power can be sustained. What Kwak Ro-jeong is betting on is that the shortage will continue even after 2030.

The bears see a different logic: in the coming decade, the total investment by Samsung and SK Hynix is expected to exceed 1,000 trillion won. With the Korean government building four more chip plants, Micron simultaneously expanding capacity, and the oligopolies dismantling the supply discipline that supported this round of extraordinary profits themselves, the low price-to-earnings ratio of cyclical stocks—something that has historically most often appeared at the top of earnings—has arrived.

The disagreement is not about whether companies live or die—it is about the cycle coordinates. Whether the KOSPI at 7,200 points and SK Hynix down by one-third is a deep breath within a super-cycle, or the last glance back from the edge of the roof, depends on how long the AI capex “engine” can keep roaring.

The World Cup exit—Koreans accepted it in just three days.

But “national luck” stock didn’t give them that chance. In two days, more than $2.6 billion will begin exchanging currency across the border; by the end of the month, 17.79 million shares of new stock will be listed in Seoul. With the “ants” who have already poured $8 billion into it this year, will they be able to catch the next baton?