"Samsung Electronics -9%, I couldn't take it and panic-sold" ... Retail investors say they sold in a rush even though they knew it would rise [World of Retail Investors]

[Financial News] #. Office worker N, 36, could not shake off a heavy feeling all day on the 7th. Every time he checked his stock app, his returns kept shrinking. Just a week earlier, his account had still been posting satisfactory gains, but this week it had kept falling and was now at risk of even eroding his principal.
That morning, N had been in high spirits after Samsung Electronics announced record quarterly results on a consolidated basis for the second quarter, with sales of 171 trillion won and operating profit of 89.4 trillion won. Analysts followed with comments that it was an earnings surprise, as operating profit jumped 1,810% from a year earlier. N opened his stock app, expecting the shares he held to surge.
But the stock price mocked the good news and fell more than 9% during the session. Outrage poured in from stock communities and group chats alike. Frightened by cries that it might "hit bottom," N finally could not hold on and dumped the shares he had been holding. It was his first panic sell. "I felt both relieved and disappointed after selling anyway," he said. "If it goes up after this, I will definitely regret it, but I thought it was better than watching my principal get cut. For now, I do not plan to look at the stock app."

Because Samsung Electronics' earnings announcement was scheduled for the day, many retail investors had expected the market to rise. But after the opening bell, events unfolded very differently from what they had anticipated. The KOSPI fell more than 8% intraday, dropping to the 7,400 level, and the Korea Exchange Main Board saw not only a sidecar but also a circuit breaker mechanism, which temporarily halted trading.
Brokerage analysts point to two major reasons for the sharp drop in the KOSPI. First, market expectations had risen to an extreme level. Samsung Electronics' operating profit beat the market consensus estimate of about 84 trillion won and set a new all-time high, but because expectations had already been priced in too aggressively, some even called it an earnings miss.
Second, foreign investors took profits. On the day, foreigners sold more than 3 trillion won worth of shares on the Korea Exchange Main Board, leading the decline. Once the major positive catalyst finally materialized, large-scale profit-taking orders, centered on foreign investors, flooded the market. That deepened the psychological slump and widened losses, while retail investors stepped in to buy and helped support the index on the downside.

Small retail investors who could not withstand the visual fear of the order book throughout the session were fully exposed to the temptation of panic selling. Instead of focusing on rational corporate value, they gave in to the immediate shock of the stock's plunge. In other words, loss aversion kicked in and pushed them to dump their assets.
N said, "In my head, I knew clearly that Samsung Electronics' fundamentals had not been damaged and that, as before, it would eventually rise if I just left it alone," but added, "I think the stress of seeing my principal being cut right away was overwhelming." He described how he felt when he sold in a rush.
When the urge to panic sell hits, the most important thing is to judge rationally why you want to sell. But beginners who lack the investing stamina to endure a long-term upward cycle may be more vulnerable to a "psychological escape-type panic sell," in which they throw stocks away at the lowest price just to flee the pain of the moment.

Brokerage firms advised investors not to be swayed by temporary market swings and instead to calmly assess where the memory cycle stands. Shinhan Investment Corp. explained, "Just as panic selling followed Micron Technology, Inc.'s recent earnings surprise, investors worried about a stock price peak after record operating profit are leading a wave of preemptive profit-taking."
Hanwha Investment & Securities also said, "With this earnings report, Samsung Electronics has become the company generating the largest quarterly operating profit in the world, and it has also achieved a complete transformation in areas once seen as weaknesses, such as High Bandwidth Memory and foundry."
It added, "The extreme volatility now appearing in the Korean memory industry, which is steadily building strong fundamentals, should be viewed as a buying opportunity. The end of the stock price cycle has not arrived, and we recommend actively increasing exposure to the Korean memory industry, which is home to the world's top semiconductor companies."
Park Yeon-ju, head of the research center at Mirae Asset Securities, said, "As profit-taking demand has grown after the gains seen since the start of the year, the recent rise in stock volatility is likely due in part to portfolio rebalancing and concerns over ETF flows." She added, "Stock volatility may continue, but semiconductor earnings and the cycle remain solid. We maintain a positive view on the semiconductor sector."
On the other hand, some analysts said the upward momentum in semiconductor stocks is weakening. In a recent report, Morgan Stanley said investors are shifting toward relatively underperforming areas, including hyperscalers.

bng@fnnews.com Kim Hee-sun Reporter