Kospi Slides 5.54% as Chip Selloff Ripples Through Seoul; Cash Hoarding Ahead of SpaceX IPO Adds Pressure

The Kospi sank more than 5% on June 5 as renewed concern over US semiconductor earnings triggered a sharp correction in Seoul, where the recent rally had been driven by chip stocks. Heavy foreign selling also pushed the won-dollar exchange rate to just below 1,550 won.

The benchmark Kospi closed at 8,160.59, down 5.54%. It fell as low as 8,038.10 during the session, stoking concern that it could break below 8,000, before trimming losses in afternoon trade to finish above 8,100. Most heavyweight stocks declined, including Samsung Electronics, which fell 6.40%, and SK Hynix, which dropped 9.92%.

Sentiment toward semiconductor shares deteriorated after overnight losses on Wall Street tied to earnings concerns in the sector. The Philadelphia Semiconductor Index fell 2.15%, while the Nasdaq Composite slipped 0.1%. The Kosdaq closed down 4.50% at 1,002.44 after falling to 992.80 intraday and briefly dropping below 1,000 for the first time in three months.

Foreign investors were net sellers of 4.3 trillion won ($3.12 billion) on the main board on June 5, driving the market lower. They have sold a net 27 trillion won ($19.6 billion) over the past six trading sessions. The outflows were also tied to shrinking global liquidity ahead of SpaceX's planned US listing.

The Kospi had been approaching 9,000 before the abrupt pullback. The reversal followed fresh concern in the US about semiconductor companies' earnings. Because the index had surged on an extreme concentration in chip shares, the correction was steeper than in other major markets. Foreign investors also appeared to be raising cash ahead of large initial public offerings including SpaceX and OpenAI.

Kospi Hit by US Chip Worries

Shares of major semiconductor companies fell across the board in Seoul trading on June 5. Samsung Electronics ended at 329,000 won, down 6.40%, while SK Hynix slid 9.92% to 2.07 million won. Leveraged products tied to the two stocks were hit even harder, with a Samsung Electronics single-stock leveraged product dropping about 13% and a 2x SK Hynix product falling about 20%. SK Square, down 7.57%, and Samsung C&T, down 13.93%, also slumped as valuations linked to the two chipmakers weakened.

The Kospi's 5.54% drop was steeper than declines in other major Asian markets. Japan's Nikkei 225 fell 1.31%, while China's Shanghai Composite lost 0.71%. The market's earlier surge, driven by a heavy concentration in chip stocks, left it more vulnerable to a sharper correction.

The selloff in Samsung Electronics and SK Hynix had been telegraphed before the open. Major US semiconductor stocks fell overnight after Broadcom issued guidance that missed market expectations. Broadcom tumbled 12.59%, while Micron Technology fell 7.74%, Sandisk lost 3.92% and Western Digital dropped 3.13%.

Some investors view the decline in chip shares as profit-taking rather than the start of a full-fledged correction. Han Ji-young, an analyst at Kiwoom Securities, said it was hard to interpret the drop as the result of weakening fundamentals or a macroeconomic crisis. With room for earnings momentum to improve, he said, a semiconductor-led Kospi still offers an attractive entry point.

Others were more cautious. Hwang Soo-wook, an analyst at Meritz Securities, said there was little in the way of a fresh catalyst before July earnings season and forecast a pause ahead of the third quarter. Noh Geun-chang, head of research at Hyundai Motor Securities, said the Kospi's upward momentum could fade quickly if semiconductor shares remained weak. Any broader downturn in the index would likely come with further chip-sector weakness, he added.

Nvidia Chief Executive Officer Jensen Huang visited South Korea on June 5, but stocks tied to the artificial-intelligence theme also fell. LG Electronics dropped 7.62%, Doosan Robotics slid 10.9% and Naver fell 4.49%. Those names were also caught in the correction after optimism had already been priced in. Financial shares, by contrast, mostly rose as investors rotated into cheaper sectors. KB Financial gained 4.51%, Shinhan Financial Group advanced 7.39%, Hana Financial Group added 2.49% and Woori Financial Group rose 2.63%. Shinyoung Securities climbed 3.29% after announcing a treasury-share cancellation a day earlier. The pattern echoed the value-stock rally seen in the US market.

Cash Hoarding Ahead of SpaceX's $2 Trillion IPO

Demand for cash ahead of blockbuster IPOs, including SpaceX's planned US listing on June 12, also weighed on stocks. SpaceX is expected to command a valuation of about $2 trillion, raising the prospect of a large draw on investor capital.

That demand was visible on June 5 in Mirae Asset Securities' subscription offering for SpaceX shares to individual and corporate professional investors. The offering sold out within minutes of opening. The brokerage accepted orders for a $500 million allocation in amounts ranging from $100,000 to $3 million, underscoring strong investor appetite.

Lee Kyung-min, an analyst at Daishin Securities, said the SpaceX listing was draining global liquidity and had triggered broad-based selling across sectors. With IPOs by OpenAI and Anthropic, each expected to be valued at about $1 trillion, also in the pipeline, concern is growing that tighter liquidity could keep pressure on the market for some time.

Kang Jin-kyu, Hankyung.com reporter josep@hankyung.com