The KOSPI index experienced sharp volatility during the week of June 29-July 3, falling to as low as 7300 before recovering to 8000. Concerns over AI demand slowdown drove the decline, triggered by OpenAI's reported IPO delay and Apple's price increase considerations. Foreign investors net sold 19.43 trillion won during the week amid won-dollar exchange rates in the 1540-1550 won range.
AI Demand Slowdown Concerns Trigger Semiconductor Stock Weakness
The KOSPI index fell sharply during the week of June 29-July 3 as concerns over AI demand sustainability spread through the market. News that OpenAI delayed its IPO to next year raised questions about AI investment continuity, while Apple's consideration of price increases due to rising semiconductor costs sparked demand slowdown concerns. Meta's entry into cloud services for AI computing resources added to worries that semiconductor demand may have peaked.
Supply expansion concerns also weighed on investor sentiment. The Korean government announced an 800 trillion won mega project to build semiconductor factories in the southwestern region, leading some to interpret that the supplier-dominant market could weaken faster than expected. Michael Burry, who predicted the global financial crisis, warned that the large-scale spending announced in Korea represents "the beginning of the end" and that "it's now only a matter of time" before a bubble bursts.
Foreign selling pressure was particularly strong. Foreign investors net sold 19.43 trillion won in the securities market during the week. Analysts attributed this to global fund rebalancing following the Korean market's sharp rise in the first half of the year. The won-dollar exchange rate moved in the 1540-1550 won range during the week, accelerating foreign capital outflows.
However, the market rebounded sharply on July 3 as analysts diagnosed the selloff as a short-term oversold condition with solid semiconductor earnings fundamentals. Jae-won Lee, researcher at Yuanta Securities, stated: "Issues that could actually cause problems for memory fundamentals — such as hyperscaler CAPEX reduction, HBM long-term supply contract cuts, server DRAM price slowdown, next-generation GPU order decreases — have not been confirmed. This correction is more about valuation de-rating due to noise rather than fundamental deterioration."
Semiconductor-related indicators remained strong. Korea's June semiconductor exports rose 199.5% year-on-year to $44.8 billion, driving overall export growth. However, the slight month-on-month decline in DRAM and SSD export unit prices is noted as a variable requiring further monitoring.
Samsung Electronics Q2 Earnings and SK Hynix ADR Listing Scheduled
The second quarter earnings season begins in earnest this week. The biggest focus is Samsung Electronics' Q2 earnings announcement scheduled for July 7. Investors are watching whether the results will exceed the securities industry consensus operating profit estimate of 84.8 trillion won. This figure reflects incentive costs applied to the expectation of 85.6 trillion won that had been raised over the past three months.
Kyung-min Lee, researcher at Daishin Securities, stated: "If Q2 earnings are better than expected, stock price gains are anticipated. Even if earnings fall short of expectations, as long as it's not a shock level, the atmosphere could reverse due to uncertainty resolution and undervaluation appeal."
SK Hynix's ADR listing on NASDAQ scheduled for July 10 is also cited as an event that could stimulate semiconductor investment sentiment. Jae-won Lee of Yuanta Securities stated: "When SK Hynix lists on NASDAQ, there is a possibility of revaluation of its valuation, which is lower compared to Micron. Passive fund inflows are also expected."
US ISM Services Index and FOMC Minutes Release Scheduled
Macroeconomic variables also require attention. The US June ISM services index to be released on July 6 is an indicator that can gauge inflation pressure. The June FOMC minutes to be released on July 8 are expected to reveal how the Federal Reserve is incorporating Middle East geopolitical risks and inflation pressures into monetary policy.
FAQ
Why did KOSPI stocks fall sharply during the week of June 29-July 3?
The KOSPI index fell from the 8400 level to as low as 7300 due to concerns over AI demand slowdown. News that OpenAI delayed its IPO to next year, Apple's consideration of price increases due to rising chip costs, and Meta's entry into cloud services triggered worries that semiconductor demand may have peaked. Foreign investors net sold 19.43 trillion won during the week.
What are the key events scheduled for Korean stocks during the week of July 6-10?
Samsung Electronics is scheduled to announce Q2 earnings on July 7, with the securities industry consensus operating profit estimate at 84.8 trillion won. SK Hynix's ADR listing on NASDAQ is scheduled for July 10. Additionally, the US June ISM services index will be released on July 6, and the June FOMC minutes will be released on July 8.
