Kospi slides over 3% on US chip shock, buybacks from Samsung Electronics and SK hynix limit losses

Kospi tumbled more than 3 percent in early trading Monday, dragged down by a sharp selloff in US semiconductor stocks, before paring some losses as buyback purchases from Samsung Electronics and SK hynix kicked in. The index remained below the 6,700 level as weakness persisted.

As of 9:40 a.m., Kospi was down 102.38 points, or 1.51 percent, at 6,686.50. The benchmark opened 2.58 percent lower at 6,613.58 before sliding further to the 6,500 range in early trade, briefly extending its decline to more than 3 percent.

On the main Kospi market, foreign investors led the selling with net sales of 277.6 billion won ($202 million), while institutions offloaded a net 135.4 billion won. Retail investors, by contrast, were net buyers of 240.5 billion won.

Among top Kospi stocks by market capitalization, semiconductor names were broadly lower at the same time. Samsung Electronics fell 1.95 percent to 252,000 won, while SK hynix dropped 1.88 percent to 1.622 million won. Samsung Electronics preferred shares (-2.09 percent), Samsung Electro-Mechanics (-1.62 percent), SK Square (-1.46 percent) and Samsung Biologics (-1.35 percent) also declined.

Other corporations — a category that includes corporate treasury buyback accounts — were net buyers of 171.6 billion won at the same time. The market, which opened down about 2 percent, clawed back some of its losses thanks to retail buying and net purchases by other corporations reflecting the buyback activity of Samsung Electronics and SK hynix. The other-corporations category has now posted net purchases for nine consecutive trading sessions, with the buyback effect from both companies having been reflected for seven straight sessions from Aug. 20 through Friday.

The two companies have roughly 45 trillion won in scheduled buybacks remaining. Samsung Electronics plans to buy back 15 trillion won worth of its own shares on the open market from Monday through Nov. 21, while SK hynix intends to repurchase 40 trillion won worth from Aug. 20 through Nov. 19. Since both companies began their purchases on Monday of last week, combined net buying has run at about 1.6 trillion won per day. Cumulative net purchases through Friday surpassed 10 trillion won.

As of 10:15 a.m., other corporations were net buyers of 279.2 billion won in the electrical and electronics sector alone — the segment that includes Samsung Electronics and SK hynix. Foreign investors and institutions sold a net 126.9 billion won and 439.2 billion won, respectively, in that sector amid the US-driven semiconductor shock, with buying by other corporations cushioning part of the decline.

Domestic markets were pressured Monday by a dual shock from the United States — rising interest rate expectations and a semiconductor selloff. US stocks fell over the weekend after hawkish remarks by Federal Reserve Chair Kevin Warsh revived expectations of a September benchmark interest rate hike. Technology and chip stocks bore the brunt of the selling: the Philadelphia Semiconductor Index plunged 3.47 percent, while Nvidia fell 4.57 percent, Marvell Technology dropped 10.28 percent and AMD slid 2.33 percent.

Concerns about intensifying competition from Chinese memory chip makers also weighed on sentiment. Sales at China's CXMT surged 874 percent year-on-year in the first half of the year, stoking fears that China could achieve greater self-sufficiency in memory chips and expand supply of commodity DRAM. Additional headwinds came from the prospect of tighter US restrictions on AI chip exports to China and the possibility that tariffs could be extended to finished IT products containing semiconductors.