Samsung Electronics and SK Hynix declined in Seoul on Tuesday, even as US semiconductor stocks rebounded overnight, underscoring persistent foreign selling in Korean tech shares.
SK Hynix fell 3.6% to 1,231,000 won, while Samsung lost 1.5% to 214,500 won by mid-morning. The KOSPI dropped 3.2% to 5,587.27, extending a volatile period for the benchmark.
The moves contrasted with Monday's 1.61% gain in the Philadelphia Semiconductor Index, which snapped an eight-session losing streak. Micron rose nearly 3% and SanDisk climbed 5.5%, suggesting some bargain hunting on Wall Street.
However, investors remain hesitant to rebuild positions in Korean memory producers, despite the US rebound. Foreign investors sold 605.8 billion won ($456 million) of KOSPI shares by mid-morning Tuesday, while institutions offloaded another 470.7 billion won, overwhelming 832.1 billion won of retail buying.
The selling followed a turbulent Monday, when foreign funds briefly turned buyers but finished as small net sellers even as the KOSPI gained 1.76%. Over the previous week, they withdrew more than 11 trillion won from Korean shares, amplifying a sell-off concentrated in technology stocks.
Samsung and SK Hynix carry significant weight in the KOSPI, so overseas selling in these names can drag the broader market lower even when domestic investors buy the dip. Kim Dae-joon of Korea Investment & Securities noted that foreign funds were withdrawing liquidity from technology and financial shares, and highlighted a 0.6 rolling correlation between the KOSPI and the US semiconductor benchmark.
The US chip rebound may itself be fragile. Nvidia and Micron recovered on Monday, but investors have yet to resolve whether heavily indebted AI infrastructure companies can sustain their expansion plans. Chris Weston, Pepperstone's head of research, said in a note cited by Reuters that the market is happy to cover shorts and unwind defensive trades, but distinguished that from rebuilding substantial exposure to AI.
SK Hynix also faces a separate issue. South Korea's financial regulator said Monday that a possible US flotation of its Solidigm storage subsidiary could violate restrictions designed to protect minority shareholders. The potential listing, previously reported to value Solidigm at up to $150 billion, has raised concerns that investors in the Korean parent could lose some economic exposure to a valuable business.
Demand for high-bandwidth memory used in AI servers remains substantial, but investors are questioning whether current profit margins can survive higher financing costs and competition from China's CXMT. Shinhan Financial Investment researcher Noh Dong-gil argued that share prices were discounting the durability of future profits, rather than weakening earnings forecasts. His assessment highlights concerns that strong memory demand today offers limited comfort if customers postpone tomorrow's data-centre projects.
Kiwoom Securities analyst Han Ji-young sees scope for a rebound after Korea's outsized losses, although he expects volatility to persist.
This article is for informational purposes only and does not constitute financial advice.
