On the second day, the KOSPI dropped roughly 8% as concerns spread from U.S. semiconductor shares, falling under the 7,700 level. This day saw the KOSPI’s drop increase right from the start, activating a sell-side circuit breaker that briefly paused algorithmic trading. In the afternoon, the KOSDAQ also faced a significant fall of around 5%, leading to the same action being taken.
As per the Korea Exchange, the KOSPI finished at 7,648.09, declining by 7.89%. Samsung Electronics and SK Hynix, considered the leading companies in the local market, ended trading at 286,000 South Korean won and 2.187 million South Korean won, falling by 9.06% and 14.57% respectively.
The vulnerability observed in today's local market stems from the widespread drop in U.S. semiconductor stocks during yesterday's trading session. On July 1, U.S.-based Micron, recognized as one of the top three memory chip manufacturers along with Samsung Electronics and SK Hynix, dropped by 10.57%. Similar significant decreases were noted among artificial intelligence-related semiconductor firms such as SanDisk (-10.62%), AMD (-6.89%), and Intel (-9.03%). While NVIDIA experienced a modest decline of 1.25%, the rest of the Magnificent Seven (M7) demonstrated resilience. Meta rose sharply by 8.81% following reports about exploring an innovative revenue strategy involving selling excess AI processing power to clients. Additionally, Apple gained 1.73%, Microsoft increased by 3.02%, Amazon climbed 1.41%, Alphabet advanced 1.07%, and Tesla saw a rise of 1.12%.
Market analysis indicates that Michael Burry, who inspired the film 'The Big Short,' contributed to the recent steep drop in stock prices by interpreting the significant semiconductor investments made by Samsung Electronics and SK Hynix in the southwest as a sign of reaching an AI summit. As reported by U.S.-based CNBC and other outlets, Burry commented on the major investment strategies unveiled by South Korean memory firms on June 29, stating, "The immediate cause behind today’s surge was the substantial investment plan revealed in Korea," yet he also noted, "I view this as the start of the end. It's just a question of time now."