🔥Korea’s stock market goes through a “black Monday,” with KOSPI shedding nearly 9%

KOSPI fell 669 points (-8.95%) to 6,806.93, wiping out ~$310B of market capitalization. South Korea’s stock market triggered the trading halt mechanism for the 7th time this year—in the history of KOSPI, it has only been triggered a total of 13 times.
Focus on SK Hynix
- Down 15.37%—its worst session in 17 years—losing ~$200B in value, and down 38% from the peak on 25/06
- The plunge came just 3 days after its ADR debuted on Nasdaq, raising $26.5B—the largest-ever U.S. IPO by a non-U.S. company.
-> The price rally catalyst no longer leads to a wave of profit-taking; funds are still buying ADRs for arbitrage and shorting domestic shares.
The paradox of Korea’s stock market is that profits are rising faster than prices
- KOSPI once surged +122% YTD at the peak; now it’s still +60% after dropping 27% over 25 days
- Profit outlook up +170% since the start of the year (the strongest since 2006) -> the market has kept raising the forecast for 17 consecutive months
-> However, KOSPI trades at below 6.4x forward earnings—cheapest in history, lower than even the 2008 bottom. A low P/E like this implies the market doesn’t believe these profits are sustainable; memory chips are still viewed as a boom-bust industry.
Samsung + SK Hynix account for more than half of KOSPI’s market cap, and leveraged ETFs generate 70% of trading volume. A market that is too concentrated means the impact will be extremely shock when Samsung or SK Hynix moves.