Samsung, SK hynix Plunge Together as KOSPI Sinks 9%

*Editor's Note: 'AI PRISM' (Personalized Report & Insight Summarizing Media) is an "artificial intelligence (AI)-based customized news recommendation and summary service" developed with support from the Korea Press Foundation. It selects and provides six customized news articles by reader type.

1. KOSPI Plunges 9%, Breaks Below 7000 for First Time in Two Months

- Key Summary: The KOSPI closed at 6806.93 on the 13th, down 669.01 points (8.95%) from the previous trading day, falling to the 6000 range for the first time since May 4. Samsung Electronics and SK hynix plunged 10.70% and 15.37% respectively, leading the index decline, with SK hynix's drop marking a record high. As a result, KOSPI market capitalization evaporated by 546.119 trillion won in a single day, while foreign investors and institutions net sold 1.7047 trillion won and 2.2193 trillion won respectively. Meanwhile, surging international oil prices amid geopolitical tensions between the United States and Iran also contributed to the market decline.

2. SK hynix ADR Catalyst Fades and Earnings Forecast Cut, Igniting Chip Peak Theory

- Key Summary: With SK hynix's American Depositary Receipt (ADR) listing — a major event — now concluded and its catalyst exhausted, followed by a downward revision of its second-quarter operating profit forecast, the debate over a semiconductor peak has spread. Korea Investment & Securities set SK hynix's second-quarter operating profit at 60.4 trillion won, about 8% below the market consensus. As a result, the combined market capitalization of the four largest KOSPI stocks — Samsung Electronics, SK hynix, SK Square, and Samsung Electro-Mechanics — has fallen by 1,522.2983 trillion won in three weeks. However, experts interpreted the move as the result of profit-taking after a short-term surge combined with a supply-demand shock, rather than damage to semiconductor fundamentals.

3. 10% of Leveraged Debt-Funded Bets Force-Liquidated Since Samsung-hynix Leverage Launch

- Key Summary: Since the launch of single-stock leveraged exchange-traded funds (ETFs), the share of actual forced selling relative to brokerage margin receivables has been trending upward. According to the Korea Financial Investment Association, the day with the highest forced-selling ratio this year was June 9, at 10.5%, and six of the top 10 trading days were concentrated after the listing of single-stock leverage products. Individual investors' margin loan balance stood at 35.574 trillion won as of the 10th, down from its peak on the 24th of last month, but losses from the plunge in semiconductor stocks are rapidly materializing. In fact, most single-stock leveraged ETFs tied to Samsung Electronics and SK hynix set new record lows since their listings.

4. Volatility Waves and the Investor's Survival Equation

- Key Summary: Exchange-traded funds (ETFs) are seen as products that have lowered the barrier to entry for individual investors through low fees and diversification effects, but single-stock leveraged ETFs, listed in May this year, are being criticized for structurally intensifying market volatility. Investors' survival strategies are largely divided into two paths. Investors with a high risk appetite may take the head-on approach of riding the momentum created by structural supply and demand, but since the combined KOSPI market capitalization weight of Samsung Electronics and SK hynix exceeds 50%, they must accept systemic risk. On the other hand, investors with a strong loss-aversion tendency may opt for a wait-and-see strategy, moving funds into parking-type ETFs or ultra-short-term bond products to reduce volatility.

5. Trading Volume Shrinks and Retail Ammunition Runs Dry, Collapsing Even at Valuation Lows

- Key Summary: The KOSPI's average daily trading value fell from 59.8994 trillion won in the first week of June to 37.2639 trillion won last week, showing the market's vitality cooling. The share of individual investor trading, which had been a driving force, also fell from 37.3% to 31.3%, and investor deposits declined for nine consecutive trading days, from 132.4697 trillion won on the 29th of last month to 105.5758 trillion won on the 10th of this month. As a result, the KOSPI's 12-month forward price-earnings ratio (PER) reached 6.36 times, approaching the level seen during the 2008 global financial crisis. On the other hand, this year's operating profit forecast for KOSPI-listed companies rose 5.27% over the past month to 970.8568 trillion won, widening the gap between valuation and fundamentals.

6. Active ETFs Failing to Track Their Index Increased Eightfold This Year

- Key Summary: Disclosures arising when domestic active exchange-traded funds (ETFs) fail to meet the correlation coefficient standard with their benchmark index are surging. According to the Korea Exchange, disclosures of correlation coefficient shortfalls totaled 499 cases from the start of this year through the 10th of this month, 7.8 times more than the total for all of last year (64 cases). As a result, four products including 'ACE TDF2030 Active Qualified' were delisted early this month, and domestic active ETFs grew from 108 products worth 12.43 trillion won in 2022 to 310 products worth 106.49 trillion won this year. Meanwhile, a considerable number of asset managers have established dedicated active teams or expanded their product lineups amid expectations of eased correlation coefficient regulations.