Kospi Slides 5.5% as Cash Heads for SpaceX IPO; Samsung, SK Hynix Tumble

Kospi 8,160, down 5.5%

Ahead of a mega IPO dubbed a "money black hole"

Foreign investors cash out to raise funds

Samsung Electronics drops 6.4%, SK Hynix slides 9.9%

Market sees temporary profit-taking rather than the start of a correction

The Kospi's sharp pullback after nearing 9,000 was driven in part by concerns over earnings at US semiconductor companies. The decline was steeper than in other major markets because the benchmark had surged on a heavy concentration in chip stocks. Foreign investors were also seen raising cash ahead of large initial public offerings such as SpaceX and OpenAI.

US chip worries drag down the Kospi

Shares of major semiconductor companies fell across the board on South Korea's main stock market on June 5. Samsung Electronics closed down 6.40% at 329,000 won, while SK Hynix slid 9.92% to 2.07 million won. Leveraged products tied to Samsung Electronics fell about 13%, while double-leveraged SK Hynix products dropped about 20%.

SK Square, which had risen on valuations linked to its stake in SK Hynix, fell 7.57%. Samsung C&T, whose valuation has also been tied to Samsung Electronics, sank 13.93%.

The Kospi's 5.54% drop outpaced declines in other major Asian markets. Japan's Nikkei 225 fell 1.31%, while China's Shanghai Composite lost 0.74%. The benchmark's steep run-up, driven largely by chip concentration, left it more exposed to a sharp pullback.

The selloff in Samsung Electronics and SK Hynix had been signaled before the opening bell. US semiconductor stocks fell sharply overnight. Broadcom tumbled 12.59% after issuing guidance that missed market expectations. Micron Technology fell 7.74%, while SanDisk and Western Digital lost 3.92% and 3.13%, respectively.

The market largely viewed the slump in chip shares as temporary profit-taking rather than the start of a full-fledged correction. Han Ji-young, an analyst at Kiwoom Securities, said it was hard to see the decline as being driven by either fundamentals or a macroeconomic crisis. With earnings momentum still having room to improve, he added, the main board remains attractive because of its heavy semiconductor weighting.

Still, some analysts are bracing for a weaker market. Hwang Soo-wook of Meritz Securities said there is little in the way of fresh momentum before July earnings season and expects a pause ahead of the third quarter. Roh Geun-chang, head of research at Hyundai Motor Securities, said the Kospi could quickly lose upward momentum if semiconductor shares remain weak. Any softness in the index would likely come alongside weakness in chip stocks.

Nvidia Chief Executive Officer Jensen Huang visited South Korea on June 5, but shares of related companies also fell. LG Electronics dropped 7.62%, Doosan Robotics tumbled 11.15%, and Naver fell 4.49%. Those stocks were also hit by a pullback after rallying sharply on earlier optimism.

Financial shares, by contrast, gained as investors rotated into the sector. KB Financial Group rose 4.51%, Shinhan Financial Group climbed 7.39%, Hana Financial Group added 2.49%, and Woori Financial Group advanced 2.63%. Shin Young Securities rose 3.29% after announcing a treasury-share cancellation the previous day. The pattern mirrored gains in value stocks in the US market.

Cashing out ahead of mega IPOs

Demand for cash ahead of large IPOs, including SpaceX, which is set to list in the US on June 12, also weighed on stocks. With SpaceX's valuation estimated at about $2 trillion, the offering could draw in a large amount of capital.

A SpaceX share subscription sold by Mirae Asset Securities to individual and corporate professional investors was fully booked within minutes of launch on June 5. The firm offered $500 million worth of shares, with subscription sizes ranging from $100,000 to $3 million, drawing strong investor interest.

Lee Kyung-min, an analyst at Daishin Securities, said the SpaceX listing drained global liquidity and triggered panic selling. The result was a broad-based decline across sectors.

Concerns are also growing that market weakness tied to a supply overhang could persist. OpenAI and Anthropic, both expected to command valuations of about $1 trillion, are also preparing IPOs after SpaceX.

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