[R&E] KOSPI Plunges 10.84% Amid Continued Foreign Net Selling, Impacted by Correction in Large-Cap Semiconductor Stocks Like Samsung Electronics and SK Hynix

[R&E: Research & Epoch] This is News Epoch's signature report that provides a view of a new era of investment through an integrated analysis of global financial data and domestic securities firm research.

Global Market Brief

Overnight, the New York stock market closed mixed as profit-taking pressure centered on tech stocks coincided with asset rotation into traditional blue-chip stocks. The blue-chip-heavy Dow Jones Industrial Average rose +1.03% from the previous trading day to 52,747.32 points, and the S&P 500 index slightly gained +0.21% to 7,428.78 points. In contrast, the tech-heavy Nasdaq Composite Index dropped -0.22% to close at 24,876.91 points. In particular, the Philadelphia Semiconductor Index, which represents investor sentiment in the semiconductor sector, tumbled -4.49%, adding downward pressure on tech stocks. This was due to major big tech companies such as Alphabet and Tesla taking a hit to their stock prices over profitability concerns following the expansion of their artificial intelligence (AI) capital expenditures (CAPEX).

The easing of geopolitical risks and the resolution of crude oil supply anxiety induced a decline in the commodities market. West Texas Intermediate (WTI) crude oil prices fell -4.06% from the previous day to $79.26 per barrel. This was the result of the geopolitical premium being removed as no airstrikes between the U.S. and Iran occurred for several days. Oil price stabilization and concerns over economic slowdown stimulated a rally in the U.S. bond market, pulling down the 10-year U.S. Treasury yield to 4.6062% (-4.2bp). While this is a factor that alleviates inflation concerns, it suggests a rotation flow of market leadership in that it failed to serve as a fundamental support for the valuations of tech stocks embroiled in overvaluation controversies.

Domestic Market Overview

Yesterday, the domestic financial market experienced its fourth-largest plunge in history due to the correction of global tech stocks and the expansion of foreign selling. The KOSPI index closed at 6,023.66 points, down -10.84% from the previous trading day, and circuit breakers were activated in both the KOSPI and KOSDAQ markets. At one point during intraday trading, the 6,000 level collapsed. The KOSDAQ also plummeted concurrently, falling -7.72% to 705.85 points. Foreign investors continued net selling on the KOSPI market for 3 consecutive trading days, executing the 12th largest net selling in history. The selling was concentrated on large-cap electrical and electronic stocks such as semiconductors. Shinhan Securities analyzed that this drop rate is the fourth largest in history, following the outbreak of the Iran War (-12.1%), the 9/11 attacks (-12.0%), and the IT bubble (-11.6%).

On the other hand, the KRW/USD exchange rate in the Seoul foreign exchange market closed at 1,452.6 won, down 12.6 won from the previous day's closing price (1,465.2 won), avoiding rapid fluctuations in the FX market. This was the result of month-end negotiation volumes from exporters and SK Hynix's dollar selling largely offsetting the downward pressure on the won caused by foreign net selling. The domestic stock market crash originated from a high synchronization with global tech stocks, especially Nasdaq semiconductor stocks, rather than a deterioration in macro fundamentals. The domestic stock market opening today is expected to seek downward support by digesting the possibility of technical bargain hunting inflows following the previous day's excessive drop and whether global macro indicators stabilize.

Key Industry Issues and Insights

Semiconductors and Electronic Components: Infrastructure Investment Anxiety and Across-the-board Price Correction of Large IT Stocks

The heavy valuation burden of global tech stocks strongly weighed down the stock prices of leading domestic semiconductor companies. Samsung Electronics (KOSPI: 005930) shares plummeted -13.39% yesterday, and SK Hynix (KOSPI: 000660) also dropped -14.65%. This reflects market concerns about the delayed establishment of revenue models compared to the AI capital expenditures of major hyperscalers like the U.S.'s Nvidia. Despite the mid-to-long-term cooperation achievements of individual companies (SK Hynix's 5-year $750 billion cooperation with Nvidia, and Samsung Electronics' $200 billion cooperation with Broadcom), it proves that macro sentiment has entered a phase where it overwhelms the fundamental strength of businesses. However, the profit-generating power of the lower supply chain value chain remains robust. LG Innotek (KOSPI: 011070) posted strong performance with consolidated revenue of 5.5272 trillion won (+40% YoY) and operating profit of 245.8 billion won (+2,057% YoY) in the second quarter. The Electro-Materials BG division of Doosan (KOSPI: 000150) also achieved record-high results with second-quarter revenue of 676 billion won (+42% YoY) and operating profit of 201.3 billion won (+47.8% YoY, OPM 29.8%). In addition, Samsung Electro-Mechanics officially notified that it would increase the price of MLCC products for agencies by about 30% starting August 1 (the second increase following an approximately 20% hike last May), and Doosan forecast its CCL revenue for optical modules to be around 200 billion won this year, suggesting that the fundamental strength of the information technology (IT) industry is being maintained. Also, Koh Young in the semiconductor inspection equipment sector proved its fundamental improvement with second-quarter revenue of 88.8 billion won and operating profit of 14.6 billion won, exceeding market expectations by 18% and 35%, respectively.

Shipbuilding and Heavy Industry: Reflection of Large-scale Project Revenue and Full-scale Structural Margin Improvement

The shipbuilding and power equipment sectors are proving a steep profit improvement through the delivery of high value-added orders and the realization of massive order backlogs. Hanwha Ocean (KOSPI: 042660) posted consolidated revenue of 5.4432 trillion won (+65.2% YoY) and operating profit of 736.1 billion won (+98.0% YoY) in the second quarter, beating the market consensus by 38.0%. This was thanks to the commercial vessel division's margin rate reaching 22.7% and the one-time reflection of 1.5 trillion won in revenue based on the delivery of the P79 FPSO in the offshore division. Ship parts maker HD Hyundai Marine Engine also recorded second-quarter revenue of 128.1 billion won (+29.1% YoY) and operating profit of 31.3 billion won (+79.3% YoY). It fell short of consensus by about 11% due to an adjustment in the engine delivery schedule, but the underlying business strength was maintained thanks to solid growth in the parts division. In the power equipment sector, HD Hyundai Electric accelerated its long-term growth cycle by recording second-quarter consolidated revenue of 1.1418 trillion won (+26.0% YoY) and operating profit of 287 billion won (+37.3% YoY, OPM 25.1%). In particular, in step with the explosive surge in global power infrastructure demand, HD Hyundai Electric signing a long-term supply contract for data centers worth 1.1 trillion won and renewing its all-time high order backlog to $84.39 billion suggests that the heavy industry sector has settled into a high-margin performance phase. In conjunction with this, HD Hyundai Marine Solution (KOSPI: 443060), which engages in the after-sales management service business, recording second-quarter revenue of 580.4 billion won (+24.1% YoY) and a core AM division operating profit margin of 27.1% also proves the diversification of profit structures across the industry.

Pharmaceuticals and Biotechnology: Settlement of Diversified Global Portfolio and Simultaneous Improvement of Top Line and Profitability

The pharmaceutical and biotech sector showed a favorable trend through the expansion of independent commercialization projects in the global market and the settlement of highly profitable products. Celltrion (KOSPI: 068270) broke its all-time quarterly record with consolidated revenue of 1.3937 trillion won (+45.0% YoY) and operating profit of 451.8 billion won (+86.3% YoY) in the second quarter. The combined revenue of five new biosimilars launched since 2025 steeply growing to 314.4 billion won (+368.5% YoY) and expanding the global revenue share to 65% played a key role. Hanmi Pharm (KOSPI: 128940) also recorded second-quarter consolidated revenue of 467.2 billion won (+29.3% YoY) and operating profit of 131.1 billion won (+116.9% YoY), exceeding market expectations by 18.4%. This is the effect of the technology transfer contract down payment with Eli Lilly of $75 million (112.7 billion won scale) being temporarily reflected, causing the operating profit margin to leap to 28.1%. ST Pharm (KOSDAQ: 237690), which succeeded in diversifying oligonucleotide commercialization revenue, also drew an upward performance curve with second-quarter revenue of 108.5 billion won (+58.9% YoY) and operating profit of 18.3 billion won (+41.7% YoY). This suggests that the domestic pharmaceutical industry, which previously relied on generic drugs, has secured a sustainable growth engine based on the diversification of highly profitable biosimilars and its own research and development (R&D) capabilities. Dong-A ST's second-quarter revenue reaching an all-time quarterly high of 207.8 billion won, and individual biotech companies such as Peptron and MedPacto rising +10.9% and +29.85%, respectively, yesterday also support this trend.

Market Signals

• Continued Decline in Global Oil Prices: The price of West Texas Intermediate (WTI) crude oil fell -4.06% from the previous day to close at $79.26 per barrel, breaking below the $80 mark. This is the result of geopolitical tension dissipating in the crude oil market as airstrikes between the U.S. and Iran halted for several days.

• Domestic Government Bond Yields Close Strong: In the Seoul bond market, the yield on 3-year government bonds fell 3.7bp from the previous trading day to 3.830%, and the 10-year yield fell 3.8bp to 4.292%, finishing with an increase in bond prices.

• Increase in Nvidia Credit Risk Premium: Right after reports that Nvidia is discussing financial guarantees worth about $250 billion for OpenAI's data center construction project, Nvidia's 5-year CDS premium rose by about 9bp.

• HYBE's Solid Earnings and Stock Price Correction: HYBE posted solid earnings with its second-quarter revenue surging to 1.45 trillion won (+105.5% YoY) and operating profit to 170 billion won (+159.3% YoY), but its stock price underwent a correction in tandem with the overall market crash following the earnings announcement.

Epoch View: Investment Implications

The historical drop of the domestic stock market yesterday and the correction centered on Nasdaq tech stocks starkly demonstrate the power of macroeconomic liquidity volatility that erodes even excellent individual corporate earnings. Although Samsung Electronics and SK Hynix established mid-to-long-term global cooperation pipelines worth hundreds of billions of dollars and major corporate parts suppliers successively posted record-high earnings, they failed to defend against the exodus of investor sentiment due to their structural synchronization with Nasdaq tech stocks. Ultimately, the current phase is a volatility expansion period where skepticism about big tech companies adjusting the pace of their AI capital expenditures and concerns over competition surrounding the semiconductor supply chain act more strongly than whether micro-level profits increase. Although the margin improvement capabilities of the shipbuilding, power equipment, and pharmaceutical sectors, which show clear signs of improving earnings fundamentals, can solidify mid-to-long-term downside support, conservative portfolio management and liquidity securing methods are effective until global macro synchronization and macroeconomic sentiment find stability. As long as the valuation correction pressure on global tech stocks continues, the recovery of macro sentiment and the resolution of geopolitical noise must take precedence over individual companies' strong performances to seek stock price stability.

This content was generated by News Epoch's proprietary AI algorithm, which tracks and analyzes public data from research centers of major domestic securities firms and global financial media in real time. Please note that this is an objective summary based on collected data and is not an investment solicitation or recommendation for any specific stock.