Strategists Say Kospi Selloff Isn’t the End for Samsung and SK Hynix, Sees Chance to Add Exposure

Brokerage research chiefs

issue emergency assessment after Kospi plunge

“Not a full-blown bear market, but the Kospi could slide toward 7,000”

U.S. rates and AI investment concerns seen as main triggers

Volatility expected to persist for now

Semiconductor-led fundamentals remain intact

Investors urged to buy in stages rather than cut losses

South Korean market strategists largely do not view the Kospi’s sharp drop on June 8 as the start of a sustained bear market. Their main argument is that earnings fundamentals tied to artificial intelligence and semiconductors remain solid. In an emergency survey of eight research heads at major securities firms conducted by the Korea Economic Daily that day, respondents broadly agreed the selloff does not signal a structural downturn. They added that volatility could continue for the time being as uncertainty lingers over the Federal Open Market Committee, inflation data and debate about the profitability of AI investment.

◇U.S. rate shock compounds AI spending concerns

Research chiefs cited rising U.S. interest rates and worries over AI-related investment as the immediate drivers of the recent correction. Park Yeon-joo, head of research at Mirae Asset Securities, said stronger-than-expected U.S. jobs data reignited concern about further rate increases and spurred profit-taking after the recent rally. Kim Hak-kyun, head of research at Shin Young Securities, said valuation pressure after a short-term surge in semiconductor stocks combined with concerns about higher global interest rates.

The market was also rattled by a shift in sentiment toward AI investment. Recent focus on the possibility that U.S. tech giants including Alphabet and Meta may raise large amounts of capital has fueled concerns that heavier AI spending could hurt profitability instead. Broadcom’s conservative guidance further damped sentiment. Lee Jong-hyung, head of research at Kiwoom Securities, said worries intensified that big tech could slow the pace of AI investment after Broadcom did not raise its AI semiconductor guidance despite posting stronger-than-expected revenue. The decline deepened as foreign investors extended their net-selling streak to 20 straight trading days, he added.

◇“The AI cycle isn’t over”

Experts stopped short of calling the decline the start of a broader bear market. The core rationale was the AI investment cycle and the semiconductor industry outlook. Kim said sharp pullbacks can occur at any time even in a bull market, adding that there is still no sign of a structural slowdown in the semiconductor cycle.

Lee Jin-woo, head of research at Meritz Securities, said the AI investment cycle and corporate earnings outlook have not turned down. That makes it difficult to interpret the current correction as the start of a lasting decline.

Lee Seung-hoon, head of research at IBK Investment & Securities, said last week’s sharp drop in U.S. stocks was the immediate trigger, but the selloff also reflected a pileup of short-term negatives including rates, inflation and a SpaceX listing. Much of that overhang could be resolved in June, he said.

While research chiefs see little chance of a full-blown bear market, they remain cautious on near-term volatility. Choi Hyun-jae, head of research at Yuanta Securities Korea, said the market’s direction should become clearer after the FOMC releases its dot plot and updated growth and inflation forecasts. Lee Jong-hyung said the turbulent trading is unlikely to end in a day or two. The market could remain highly sensitive until a clearer picture of second-quarter earnings emerges.

Many of the strategists pointed to around 7,000 as a likely support level for the Kospi. Yoon said that, based on the maximum declines seen during the U.S.-China tariff war and the Middle East war, the index could find a short-term floor near 7,000.

◇“Avoid indiscriminate chasing”

On strategy, many said investors should guard against fear-driven panic selling. The dominant advice was to keep some cash on hand and buy in stages rather than rush into bargain hunting. Yoon said the correction could offer an opportunity for investors who had not sufficiently increased exposure to market leaders. Lee Jong-hyung said investors should avoid both panic-driven stop-loss selling and indiscriminate chasing. Long-term investors should stick with a phased buying strategy focused on high-quality stocks, he said.

Jeon Ye-jin, Jo A-ra and Oh Hyun-ah, Korea Economic Daily reporters