Samsung Electronics (005930.KS) and SK hynix (000660.KS) were down more than 2% in premarket trading on the 25th, hit by a selloff in U.S. chip stocks. With caution building ahead of Nvidia's earnings, sharp declines in shares such as Micron and SanDisk spilled over into Korean chip stocks.
According to Nextrade (NXT), Samsung Electronics was trading at 250,500 won as of 8:03 a.m., down 2.53% from the previous session. SK hynix was at 1,629,000 won, down 2.51%. Other chip-related stocks also weakened, including SK Square (down 3.90%) and Samsung Electro-Mechanics (down 2.43%).
On Wall Street overnight, profit-taking hit large-cap technology and chip stocks. The Dow Jones Industrial Average rose 0.3%, but the Standard & Poor's 500 and the Nasdaq fell 0.3% and 0.8%, respectively. Micron Technology tumbled 5.9% and SanDisk dropped 6.5%, while Nvidia lost 2.9%.
Analysts attribute the moves to a correction in chip stocks that began in Korea after Samsung Electronics announced its shareholder return plan and then spread to U.S. markets, compounded by growing investor caution ahead of Nvidia's earnings. Nvidia in particular fell for a seventh straight session, its first such losing streak in four years, prompting a broader move across the chip sector to trim positions preemptively.
Still, analysts said it is hard to conclude that the fundamentals of chip stocks have been damaged. With no clear signs of weakness in memory prices or corporate earnings forecasts, they said the recent decline is closer to a short-term shift in supply and demand tied to fading expectations for shareholder returns and the run-up to Nvidia's earnings.
Steadier long-term U.S. Treasury yields and international oil prices are also cited as factors likely to support the floor for Korean stocks. After the U.S. Treasury expanded the size of its bond buybacks, speculation that it could tap its Treasury General Account (TGA) balance of about $940 billion as a funding source for further buybacks has eased concerns about additional increases in long-term rates. West Texas Intermediate (WTI) crude also weakened to around $85 a barrel.
Han Ji-young, an analyst at Kiwoom Securities, said Korean stocks would attempt a rebound, supported by a perception that the correction in U.S. chip stocks had already been priced in, along with a calming of the sharp rise in rates, weaker oil prices and bargain-hunting after the previous day's plunge.
