KOSPI plunges 8% as Samsung and SK Hynix track the Nasdaq at their tightest since 2021
Samsung Electronics and SK Hynix sank as much as 9.5 percent and 11.1 percent respectively in Seoul on Tuesday, dragging the KOSPI down about 8 percent as investors retreated from artificial intelligence trades.
Reuters reported the rout extended a global pullback from chip stocks, but for portfolio managers the sharper signal lies in how tightly Seoul now tracks New York.
The 60-day correlation between the KOSPI and the Nasdaq 100 recently reached about 0.50, its highest since 2021, according to data from Rayliant cited by CNBC.
Samsung and SK Hynix together make up more than half of the KOSPI, and both sit at the centre of the AI hardware supply chain, supplying the memory chips that feed data centres run by US technology giants.
Data-centre demand climbed from about 40 percent of global DRAM demand last year to more than half this year, Futurum Group analyst Rolf Bulk told CNBC, and he expects that share to keep rising.
That concentration has hollowed out a diversification play advisors long relied on.
Korea "no longer provides diversification" from US tech, Bulk said.
He said half the index rides one cyclical theme, so a drop in hyperscaler capex would hit the market harder than most.
The two markets increasingly move on the same catalyst.
US and Korean tech stocks increasingly track "a common underlying factor," said Phillip Wool, head of research at Rayliant Global Advisors.
He named it as sentiment toward the AI hardware trade.
Several developments fed Tuesday’s selling, according to Reuters.
A report that Chinese firms had begun building homegrown deep ultraviolet lithography tools revived fears that Chinese memory makers could expand capacity faster than expected.
Chinese chipmaker CXMT’s debut on Monday added to the unease, with the stock soaring 466 percent to become the most valuable China-listed company at about 3.3tn yuan, or nearly US$490bn, as per AP News.
Financing worries compounded the competition concerns.
Nvidia shares fell nearly 5 percent after the Wall Street Journal reported the company could provide a roughly US$250bn backstop for an OpenAI data-centre project, Reuters said, raising questions about whether the chipmaker is helping fund its own customers.
Kiwoom Securities analyst Han Ji-young pointed to post-earnings weakness.
Samsung Electronics and Alphabet both beat expectations, yet semiconductor shares saw "sharp declines" after the results, he told Reuters.
The selling followed a soft Monday on Wall Street, where the S&P 500 edged up 0.02 percent to 7,413.18, the Dow rose 0.51 percent and the Nasdaq slipped 0.18 percent.
SK Hynix’s newly listed US shares closed at US$143.02, below their US$149 IPO price.
Regulators are watching the volatility.
Lee Eog-weon, chairman of the Financial Services Commission, told brokerages and asset managers in Seoul that the watchdog could cap how much retail investors put into single-stock leveraged ETFs tied to the two chipmakers, Reuters reported, after raising cash-deposit requirements for the products last week.
The next tests come quickly.
The Federal Reserve delivers its rate decision on Wednesday, and Microsoft reports earnings the same day, with Amazon and Apple to follow on Thursday, results that could set the tone for the AI-linked names now driving both markets.
