Samsung Earnings Surprise Fails to Stop Selloff as Kospi Drops 4.9%

Kospi falls to the 7,600 level despite Samsung's record earnings

Foreign investors extend net-selling streak to 13 sessions

Sell-side sidecar triggered early in the session

Circuit breaker halts trading for the sixth time this year

South Korea's Kospi fell nearly 5% on July 7 as foreign investors kept selling, pulling the benchmark down to the 7,600 level. The slide came as investors took profits across semiconductor stocks led by Samsung Electronics, even after the company reported record quarterly earnings that beat market expectations.

The Kospi closed at 7,656.31, down 395.02 points, or 4.91%, from the previous session. After opening 1.64% lower, the index at one point slumped more than 8%, triggering a circuit breaker that halted trading for 20 minutes. It was the sixth circuit breaker on the main board this year. Earlier, at 10:23:41 a.m., program sell orders were suspended for five minutes.

Foreign and institutional investors sold 3.3835 trillion won and 685.8 billion won of shares, respectively, on the Kospi, dragging the index lower. Foreign investors extended their net-selling streak to 13 straight trading days. Retail investors bought 3.9182 trillion won of shares, but that was not enough to blunt the decline.

Investors dumped Samsung Electronics shares even after the company reported preliminary second-quarter earnings that topped forecasts, treating the release as a cue for profit-taking. Samsung's second-quarter operating profit surged 1,810% from a year earlier to 8.94 trillion won, beating the market forecast of about 8.4 trillion won. Excluding bonus-related provisions, the company effectively earned more than 10.6 trillion won in the second quarter alone.

Even so, Samsung Electronics fell 6.92% to the 290,000 won range. SK Hynix dropped 6.06%. Other semiconductor supply-chain stocks also closed sharply lower, including Samsung Electro-Mechanics, down 9.85%, Hanmi Semiconductor, down 7.06%, and LG Innotek, down 4.8%.

Among the top 10 Kospi stocks by market capitalization, SK Square fell 9.3%, LG Energy Solution dropped 6.35%, Samsung C&T slid 5.56%, Samsung Life Insurance lost 4.7% and Hyundai Motor declined 4.48%. KB Financial Group rose 1.35%, while Samsung Biologics added 1.21%.

The Kosdaq fell 15.84 points, or 1.87%, to close at 831.23. After opening down 0.39%, the index briefly turned higher early in the session before reversing lower in morning trading. Its loss later widened to more than 4%.

On the Kosdaq, retail and institutional investors sold 411.8 billion won and 23.4 billion won of shares, respectively, while foreign investors bought 435.6 billion won.

Semiconductor materials, parts and equipment shares also tumbled on the Kosdaq. Wonik IPS dropped 9.48%, LEENO Industrial fell 4.01%, EO Technics lost 6.92%, PSK Holdings declined 5.27% and Jusung Engineering dropped 3.36%. Among the top 10 Kosdaq stocks by market capitalization, Rainbow Robotics fell 4.27%, EcoPro slipped 1.29% and EcoPro BM lost 1.23%. Kolon TissueGene rose 6.91%, HLB gained 6.05%, ABL Bio added 4.1% and Alteogen climbed 1.96%.

Go Jeong-sam, Hankyung.com reporter, jsk@hankyung.com