The recent sharp drop in the Korean market really can’t be explained by fundamentals alone. Changes in liquidity may be more critical. My understanding of liquidity before was quite shallow—I just thought the company’s logic hadn’t changed, and that it would pass if you could hold through the decline. But the damage caused by this short-term selloff has pushed me to start re-learning and re-understanding how money in the market actually comes in—and how it leaves.

Earlier, SK hynix / Samsung saw gains that were too large. Foreign funds, institutions, and leveraged positions built up a significant amount of holdings. With ADR issuance and listing events being cashed in, alongside rising oil prices, elevated interest-rate expectations, and a weakening Korean won, capital began to concentrate on taking profits.
After foreign investors sell Korean stocks, they convert the Korean won back into US dollars. The weaker the Korean won is, the worse the dollar returns for those foreign holdings in Korean equities become, and the motivation to exit keeps strengthening.
For large-cap stocks like SK hynix and Samsung, liquidity is usually best—so they often become the “cash-out machines” when institutions start cutting positions. After the stock price drops quickly, the margin ratio in financing accounts falls, and some investors are then forced to sell as well, further accelerating the decline.
By the time you reach leveraged products at 2x/3x levels, on top of that come mechanical deleveraging after daily resets, narrowing premiums, and worse liquidity in swaps and market-making—so the losses get amplified layer by layer.
Fundamentals determine how much a company is worth in the long run, but liquidity can determine how fast and how hard it falls in the short term. This time, I finally witnessed the power of that.