KOSPI Plunges 5.8% on Fears of Slowing Semiconductor Demand from Apple [Financial News Close]

[Financial News] The KOSPI (Korea Composite Stock Price Index) plunged more than 5% and fell back to the 8,400 level on heavy selling by foreign investors and institutions. The drop came after reports that Apple was considering raising prices on major products because of higher semiconductor costs, sharply shifting market sentiment on the chip industry from a tailwind driven by supply shortages to concerns over weakening demand.
According to the Korea Exchange on the 26th, the KOSPI closed at 8,411.21, down 519.09 points, or 5.81%, from the previous session. The index opened 1.31% lower at 8,813.18 and widened its losses throughout the day.
Volatility surged during the session. A sell-side sidecar was triggered at 11:18 a.m., followed by a circuit breaker at 12:10 p.m. Trading in all stocks on the main board, as well as stock-related futures and options, was temporarily halted after the KOSPI remained down more than 8% from the previous close for over one minute. It was the second sell-side sidecar and circuit breaker this week.
The immediate trigger for the market rout was seen as news that Apple was moving to raise prices. The previous day, Micron Technology had said in its earnings release that the chip shortage would likely persist for a prolonged period, which the market initially viewed as a positive for semiconductor companies' earnings. But the interpretation changed within a day after reports emerged that Apple was reviewing price hikes for key products due to rising chip costs.
While higher chip prices are positive for suppliers, investors worried that they would increase costs for information technology (IT) companies that use semiconductors, ultimately leading to slower demand. That concern quickly dampened market sentiment.
Jo A-in, an analyst at Samsung Securities, said, "Korean stocks, which have a high semiconductor weighting and had risen sharply since the start of the year, saw a relatively larger correction. Major Asian markets such as Japan, Taiwan and Hong Kong, as well as U.S. index futures, also weakened in tandem." She added, "Although higher semiconductor prices are positive for corporate earnings, concerns that the added cost burden on buyers could eventually slow chip demand have spread across the market."
On the supply side, individual investors bought a net 819.26 billion won in bargain hunting, but they could not offset the heavy selling by foreign investors and institutions. Foreign investors sold a net 4.6522 trillion won, while institutions sold a net 3.7844 trillion won.
Major large-cap stocks also fell across the board. SK Square dropped 9.43%, the steepest decline, while SK hynix (-8.36%), LG Energy Solution (-5.82%) and Hanwha Aerospace (-5.43%) also tumbled.
The KOSDAQ (Korean Securities Dealers Automated Quotations) also closed lower, down 36.44 points, or 4.10%, at 851.37. Meanwhile, in the Seoul foreign exchange market, the won closed at 1,532 per dollar, down 10.7 won from the previous session.
khj91@fnnews.com Kim Hyun-jung Reporter