Korean stocks faced a challenging week as the KOSPI index fell 3.84% from June 29 to July 3, pressured by foreign investors who sold approximately 16 trillion won of Samsung Electronics and SK Hynix shares during the period. The decline reflects a triple burden of high interest rates, a strengthening dollar, and deteriorating market supply dynamics, with institutional buying exceeding 4 trillion won on the final trading day helping the index defend the 8000 level. The selling pressure stems from foreign investors' concerns over exchange rate losses amid dollar strength, combined with rebalancing and profit-taking in Korean semiconductor stocks. Market attention now turns to Samsung Electronics' Q2 preliminary earnings announcement on July 7, which analysts view as a critical inflection point for determining the Korean market's near-term direction.
Foreign Investors Sold 16 Trillion Won of Samsung and SK Hynix Shares
According to the Korea Exchange, foreign investors sold approximately 16 trillion won of Samsung Electronics and SK Hynix shares during the week of June 29 to July 3. Kim Dae-jun, a researcher at Korea Investment & Securities, stated that "in a dollar-strength environment, speculative positions maintain a buying-dominant stance," adding that "the exchange rate continues its high flight due to changes in fundamentals and stock market supply." He noted that "the high exchange rate phase can encourage a vicious cycle that stimulates foreign net selling of stocks."
The combination of dollar appreciation and concerns over exchange rate losses has intensified foreign selling pressure. This dynamic has been further amplified by rebalancing activities and profit-taking in Korean semiconductor stocks, creating what analysts describe as a reinforcing negative cycle between high exchange rates and foreign investor outflows.
Meta Business Model and Apple China Memory Talks Raise AI Capex Concerns
Concerns about artificial intelligence capital expenditure (AI Capex) from the United States have added pressure to Korean semiconductor stocks. Meta announced that it could sell surplus computing resources following large-scale capital investments, which the market interpreted as a potential "peak-out" scenario for AI capital spending, triggering increased selling of semiconductor stocks. Additionally, news that Apple is negotiating to purchase Chinese-made memory chips has dampened investor sentiment.
Kang Jin-hyuk, a senior researcher at Shinhan Investment & Securities, commented that "as we enter the second half of the year, multiple noises are serving as justifications for semiconductor profit-taking," adding that "with heightened sensitivity to negative factors, it is necessary to pay attention to events such as SpaceX's inclusion in the Nasdaq-100." The potential inclusion of SpaceX in the Nasdaq-100 index could lead exchange-traded funds (ETFs) tracking the index to mechanically purchase SpaceX shares, potentially prompting profit-taking in semiconductor stocks that have surged in the short term.
Samsung Electronics Q2 Earnings Announcement Set for July 7
Samsung Electronics is scheduled to announce its Q2 preliminary earnings on July 7. Market participants view this announcement as a critical turning point for the Korean stock market, given the current uncertainty. Since Q2 earnings expectations are already reflected in the stock price, attention is focused on the company's guidance for future quarters.
Kim Dae-jun stated that "at this point, the most important thing is Samsung Electronics' Q2 preliminary earnings," emphasizing that "both the earnings and the guidance must be positive." If the guidance exceeds expectations, analysts suggest the market could rebound and attract foreign investors who have been net sellers. Conversely, if the guidance falls short of expectations, increased volatility in the Korean stock market is anticipated.
FAQ
How much did foreign investors sell in Korean semiconductor stocks last week?
Foreign investors sold approximately 16 trillion won of Samsung Electronics and SK Hynix shares during the week of June 29 to July 3.
When will Samsung Electronics announce Q2 earnings?
Samsung Electronics is scheduled to release its Q2 preliminary earnings on July 7.
