Record Panic Selling Hits Samsung, SK Hynix, but Brokers Still See Kospi at 10,000

"Memory Profits to Stay Strong" as Brokerages Keep Bullish View Through Kospi Whiplash

Optimism persists despite one of the sharpest bouts of panic selling on record

Brokerages say the semiconductor cycle is not over

"Kospi will enter the 10,000 era in fairly short order"

Shares of Samsung Electronics Co. and SK Hynix Inc. whipsawed again on July 14, capping one of the wildest trading sessions on record. Even as market anxiety deepened, brokerages said the moves reflected a short-term supply-demand shock and a valuation reset rather than a deterioration in industry conditions. Their longer-term view remained upbeat.

Analysts argue that the semiconductor supercycle that has driven the stock market higher remains intact, backed by expanding artificial intelligence investment, long-term agreements and resilient memory demand.

From a 10% slide to a 3% rebound: Samsung and SK Hynix on a roller coaster

SK Hynix and Samsung Electronics finished the regular session up more than 3% after swinging between steep losses and sharp gains throughout the day.

SK Hynix closed at 1,913,000 won on July 14, up 3.69% from the previous session. The intraday swings were unusually violent for a large-cap stock. The shares fell as much as 4.74% at the open to 1,757,500 won, then rebounded to 1,929,000 won by 10:06 a.m., up 4.55%. They reversed again and plunged 9.05% to 1,678,000 won around noon before surging back in afternoon trading.

Samsung Electronics also swung repeatedly before ending up 3.34% at 263,000 won. The stock dropped more than 2% just after the open, then rebounded to as high as 270,000 won around 10 a.m., up 6.09%. At 12:22 p.m., it briefly fell 2.95% to 247,000 won. Bargain buying by foreign and institutional investors followed the previous day’s selloff, while heavy retail liquidation continued, setting up a tug-of-war in the market.

The previous session was even more severe. Samsung Electronics tumbled 10.70%, while SK Hynix sank 15.37%. SK Hynix posted its biggest one-day decline on record. The selloff came as investor sentiment cracked under persistent concerns that semiconductors were nearing a peak, compounded by renewed fears of a resumption in war between the US and Iran.

“The volatility in the Korean stock market has expanded beyond levels seen during the global financial crisis,” Kim Byung-yeon, an analyst at NH Investment & Securities, said. Debate over a semiconductor peak, renewed US-Iran tensions, disruptions in domestic trading flows and worries about higher US interest rates all fed into the move.

“The conviction of retail investors, who had helped drive the stock market’s uptrend, is starting to weaken,” Kang Dae-seung, an analyst at SK Securities, said. Net buying has held up, but the funding base behind it — including margin loans and client deposits — has already started to shrink.

Too early to call the top in semiconductors, brokerages say, citing LTAs

Bullish views are persisting even as extreme volatility continues. Brokerages say the turmoil does not signal a slowdown in semiconductor fundamentals. Instead, they argue investors should focus on long-term agreements, or LTAs, which could help preserve elevated profit levels in the memory industry for an extended period.

Chae Min-sook, an analyst at Korea Investment & Securities, said prices in the spot market, where memory products are traded quickly, could keep rising because of tight supply. Prices for volumes already committed under LTAs with big tech companies, however, should rise more gradually under contract terms instead of tracking short-term spot swings. Even if market prices jump, the prices customers actually pay under long-term contracts would climb more steadily.

“Structural supply constraints from the expansion of high-bandwidth memory, or HBM, and the long-term contract structure through LTAs will provide the foundation for the memory industry to sustain high profit levels for a long time,” Chae said. The key drivers of the cycle — more AI infrastructure spending and limited supply — remain unchanged.

“Supply shortages will continue next year, and demand remains strong enough that this is not even the stage to discuss inventory accumulation,” Han Dong-hee, an analyst at SK Securities, said.

Han added that the risk of downward revisions to AI investment plans remains limited now that major big tech companies are beginning to secure greater visibility on prices and volumes through LTAs. Better demand visibility through LTAs, lower costs from potential capacity-expansion missteps, and a shift toward longer, less volatile cycles are central to a re-rating of memory in the AI era, he said.

Recent pullback seen as repricing, not the start of a bear market

Brokerages broadly argued that concern over the domestic stock-market selloff had become excessive.

Lee Kyung-min, an analyst at Daishin Securities, said the sharp decline was driven more by a valuation adjustment and a trading-flow shock tied to leverage unwinding than by any damage to fundamentals. He also stressed that earnings forecasts for major sectors, including semiconductors, are still being revised upward.

“The Kospi had already surged 212.34% from this year’s intraday low to its intraday high, leaving the market burdened by overheating and rally fatigue,” Lee said. Negative headlines centered on semiconductors, which had led the advance, then accelerated the downturn.

“This latest semiconductor slump does not reflect damaged fundamentals,” Lee said. “It reflects cracks in the AI industry narrative, a pullback in valuations and a trading-flow shock caused by leverage liquidation.” Earnings expectations for both semiconductor and non-semiconductor names in the Kospi are still moving higher.

Kim Doo-eon, an analyst at Hana Securities, struck a similar note. “The recent correction is closer to a repricing process in which prices and trading flows regain balance after the first leg of the rally, rather than the start of a bear market,” he said. If SK Hynix’s American depositary receipt premium and memory profits hold up, this pullback could mark preparation for a second advance rather than the end of the bull market.

Kim also said the semiconductor industry has not yet passed its peak. If SK Hynix’s ADR premium, memory prices, profit estimates and the floor in customer deposits stabilize together, foreign selling and pension-fund rebalancing are more likely to end as a normalization of trading flows than as a trend reversal.

The market is also watching second-quarter earnings in the US and South Korea, as well as US June consumer price index data due on July 14, for a catalyst for a rebound. If the inflation report eases fears of higher rates, bond yields and the dollar could stabilize, restoring broader momentum in equities.

Lee said strong second-quarter earnings would help the Kospi resume its uptrend. “The earnings season will begin in earnest next week, bringing undervaluation in major sectors back into focus,” he said. “With uncertainty in investor sentiment and trading flows still present, the key near-term question is whether the Kospi can hold the 8,200 level. If it breaks above that, it will enter the 10,000 era in fairly short order.”

Kang Kyung-joo, Hankyung.com reporter qurasoha@hankyung.com