KOSPI Slides 2.3% as Oil Spike and Rate Fears Hit Chipmakers
South Korea's benchmark index fell 2.32% as Brent crude topped $107 and Fed hike odds rose, dragging down Samsung and SK Hynix despite retail buying.
South Korea's KOSPI index dropped 2.32% to 6,749.36 on Tuesday, sliding below the 6,700 threshold in early trading before recovering slightly. The decline was driven by surging crude oil prices and heightened expectations for Federal Reserve interest rate hikes. As reported by GN stocks/chips, the market faced a triple headwind from geopolitical tensions, rising U.S. Treasury yields, and concerns over a slowdown in AI-driven semiconductor demand.
Foreign and institutional investors were net sellers, offloading a combined 3.78 trillion won (approximately $2.8 billion) of shares. Retail investors absorbed this selling pressure, becoming the sole net buyers with purchases of 3.26 trillion won (approximately $2.4 billion). The KOSDAQ index also fell 0.96% to 812.73, reflecting broad-based weakness across the Korean equity market.
Semiconductor Heavyweights Lead Market Decline
The electrical and electronics sector posted the worst performance, falling more than 4%. Samsung Electronics declined 2.70% to the low 250,000 won range, while SK Hynix dropped 4.42% to approximately 1.71 million won. SK Square fell 5.69% and Samsung Electro-Mechanics lost 3.79%, indicating broad distress in the chip supply chain. These moves were attributed to fears of a broader semiconductor industry slowdown and specific concerns regarding high-bandwidth memory demand.
Oil Prices and Fed Hike Odds Drive Pressure
Brent crude surpassed $107 per barrel and WTI climbed above $102, driven by Middle East tensions and the shutdown of Saudi Arabia's east-west pipeline. These energy costs threaten to reignite inflation, leading markets to price in an 80% probability of a 25-basis-point rate hike at the upcoming FOMC meeting. The 10-year U.S. Treasury yield approached 5%, increasing valuation pressure on growth stocks and dampening sentiment in Seoul.
Retail Investors Counter Institutional Selling
Institutional selling was particularly concentrated in securities firms, which offloaded 840.3 billion won, and private equity funds, which sold 177.4 billion won. On the KOSDAQ board, foreigners and institutions sold a net 160.9 billion won, while retail investors bought 163.7 billion won. This divergence highlights a shift in market dynamics, where domestic retail capital is providing support amidst institutional risk-off positioning.
