"Is This Really the No. 1 and No. 2 by Market Cap?"... 'Samsung Electronics and SK Hynix' Swung 5% Every Other Day [Why the Market Is Moving]

[Financial News] The share prices of Samsung Electronics and SK hynix are swinging so sharply that it is hard to view them as large-cap stocks. Over the past month, SK hynix rose or fell by more than 5% on roughly every other day. As the two stocks account for 50.93% of KOSPI's market capitalization and 54.44% of its trading value, they are effectively shaking the entire market.■ SK hynix swings 5% every other dayAccording to the Korea Exchange on the 22nd, Samsung Electronics' average daily absolute price change over the past month, from July 21 to the previous day, was 5.47%, up 2.06 percentage points from its one-year average of 3.41%. SK hynix also posted an absolute price change of 6.62% over the same period, 2.34 percentage points higher than its one-year average of 4.28%.
During the past month, Samsung Electronics moved by more than 5% on 10 of 23 trading days, while SK hynix did so on 12 days. For SK hynix, that means the stock moved by more than 5% on 52.2% of all trading days, or more than half. During the period, Samsung Electronics' biggest daily gain and loss were 26.81% and -13.39%, respectively. SK hynix rose as much as 29.95% and fell as much as 14.65%.
The broader market was also volatile. Over the same period, KOSPI's average daily absolute price change was 4.01%, far above its one-year average of 2.34%. Samsung Electronics and SK hynix posted monthly absolute price changes that were 1.46 percentage points and 2.61 percentage points higher than KOSPI, respectively.
The swings have continued in recent days as well. Samsung Electronics plunged 7.82% on the 19th, then rebounded 9.49% on the 20th and rose another 3.87% on the 21st. SK hynix also dropped 9.75% on the 19th, jumped 12.73% the next day, and gained another 2.31% on the 21st.
The two stocks now account for more than half of the market. As of the 21st, the combined market capitalization of Samsung Electronics and SK hynix stood at 2,909.4792 trillion won, or 50.93% of KOSPI's total market capitalization of 5,712.9794 trillion won. That is more than double the 23.07% share recorded on Aug. 21 last year, an increase of 27.86 percentage points.
The concentration in trading value is even more striking. From July 21 to Aug. 21, Samsung Electronics recorded cumulative trading value of 164.8292 trillion won, while SK hynix logged 205.5357 trillion won, for a combined 370.365 trillion won. That accounted for 54.44% of KOSPI's total trading value of 680.3302 trillion won during the same period. In other words, more than half of the money traded on KOSPI was concentrated in just these two stocks. On the 21st alone, the two stocks generated 15.1339 trillion won in trading value, or 52.37% of the day's total KOSPI trading value.■ 66 trillion won poured into single-stock leveraged ETFs... trading surges amid volatilityAs the swings in Samsung Electronics and SK hynix intensified, the impact of single-stock leveraged exchange-traded funds (ETFs), introduced in May, has come under renewed scrutiny. The concern is that rebalancing trades designed to track twice the return of the underlying asset can amplify the stock's existing direction. Although trading volume has declined since tighter regulations were introduced at the end of last month, tens of trillions of won are still moving through the products.
According to the Korea Exchange, cumulative trading value in 'KODEX SK Hynix Single-Stock Leverage ETF' reached 35.5432 trillion won from July 21 to Aug. 21, ranking third among all ETFs behind only 'Samsung KODEX 200 ETF' and 'KODEX Leverage ETF.' 'MIRAE ASSET TIGER SK Hynix Single Stock Leverage' also recorded 13.8317 trillion won in trading. Together, the two products totaled 49.3748 trillion won.
Samsung Electronics-related products were also actively traded. Over the same period, 'KODEX Samsung Electronics Single-Stock Leverage ETF' recorded 11.2551 trillion won in trading value, while 'MIRAE ASSET TIGER Samsung Electronics Single Stock Leverage' posted 5.4999 trillion won. In total, 66.1298 trillion won was traded in the four single-stock leveraged ETFs based on Samsung Electronics and SK hynix over the month.
Leveraged ETFs rebalance positions every day to track a multiple of the underlying asset's daily return. When prices rise, they increase exposure to the underlying stock or related futures to match the target leverage. When prices fall, they reduce exposure. That is why, when a stock moves sharply in one direction during the day, rebalancing demand late in the session can trigger additional trades in the same direction.
■ SK hynix at 1.73 million won... a 5% move means 86,500 won in a dayThe higher share prices are also making the swings feel larger to investors. SK hynix closed at 1.73 million won on the 21st. A daily move of just 5% means a change of 86,500 won per share. In fact, the intraday low and high that day were 1.669 million won and 1.773 million won, a difference of 104,000 won.
A higher share price does not by itself increase volatility on a return basis. But because the won amount of gains and losses is larger, even small percentage moves can translate into significant paper profits or losses for investors using margin or leverage. That, in turn, raises the likelihood that sharp price changes will trigger position adjustments.
A securities industry official said, "When prices surge, short-covering by short sellers and momentum buying can overlap. Conversely, when prices plunge, stop-loss selling and reductions in margin positions can occur at the same time." The official added, "If rebalancing by leveraged ETFs also works in the same direction, price moves can trigger trading, and that trading can then move prices again, creating a self-reinforcing effect."
Another official noted, "The recent swings in Samsung Electronics and SK hynix cannot be explained by the semiconductor cycle alone." The official said, "With supply and demand concentrated in two stocks that account for more than half of KOSPI's market capitalization and trading value, foreign and program trading are setting the direction, while leveraged products and investors' position adjustments are creating an environment that can amplify the moves further."

[email protected] Choi Doo-sun Reporter