Meta Shock Sends Chip Stocks Crashing as Kospi Plunges 7.89% Below 8,000

Kospi closes down 7.89% on fears of excessive US semiconductor investment

Meta shock raises oversupply concerns after mention of "surplus computing resources"

Kosdaq index also falls 6.74%

South Korea’s Kospi closed down more than 7% as concerns over excessive US semiconductor investment hammered the market.

On July 2, the Kospi ended at 7,648.09, down 655.32 points, or 7.89%, from the previous session. It was the first closing finish below 8,000 since June 11.

The Kosdaq also was swept up in the selloff. The index closed at 866.72, down 6.74% from a day earlier.

As the slump intensified, sell sidecars, a market safeguard, were triggered on both bourses. The Kospi sidecar was activated at about 9:07 a.m., and the Kosdaq sidecar followed at about 12:47 p.m. They were the 15th and sixth such triggers this year, respectively.

Overnight in New York, major indexes fell across the board as semiconductor shares came under heavy selling pressure. Nvidia slipped 1.25%, Broadcom lost 2.23%, Micron tumbled 10.57%, AMD dropped 6.89%, Intel fell 9.03%, Applied Materials slid 9.97%, Lam Research lost 9.71% and SanDisk sank 10.62%. The Philadelphia Semiconductor Index plunged 6.27%.

Earlier, Apple Chief Executive Officer Tim Cook had voiced frustration over rising memory prices, likening them to a "once-in-a-century flood." On July 2, sentiment toward chip shares deteriorated further after a view emerged that Meta could launch a cloud business using surplus computing resources. That raised concerns that Meta’s interest in cloud services may reflect overinvestment in AI data centers.

The selloff battered South Korea’s two biggest chipmakers. Samsung Electronics and SK Hynix tumbled about 9% and 14%, respectively. DB HiTek and Hanmi Semiconductor also fell more than 10%. On the Kosdaq, chip equipment makers such as Jusung Engineering, Wonik IPS, Leeno Industrial and EO Technics dropped 5.99%, 20.53%, 7.96% and 11.38%, respectively.

Foreign investors drove the market lower. They were net sellers of 4.372 trillion won in the Kospi on July 2. Institutions also sold a net 2.077 trillion won. Retail investors were the only net buyers, purchasing a net 6.262 trillion won.

On the Kosdaq, retail investors were net buyers of 535 billion won, helping support the index, while institutions and foreign investors were net sellers of 357 billion won and 196 billion won, respectively.

The won-dollar exchange rate edged higher. In Seoul trading, the won closed the daytime session at 1,555.8 per dollar, up 0.9 won from the previous session.

Noh Jeong-dong, Hankyung.com reporter dong2@hankyung.com