The KOSPI closed at 6856.83 on July 14, returning to levels last seen on May 4 when it stood at 6936.99, according to Korea Exchange data. While the index appeared flat over the two-month period with a decline of 1.16%, non-semiconductor sectors experienced severe losses, with 21 of 24 sectors falling—most by double digits. The semiconductor rally led by Samsung Electronics and SK Hynix masked widespread weakness across other industries, creating what analysts describe as an 'index illusion' where flat headline numbers concealed significant investor losses in diversified portfolios.
21 of 24 Sectors Record Double-Digit Declines
Only three sectors outperformed the KOSPI's 1.16% decline since May 4: insurance rose 15.93%, electronics gained 12.17%, and manufacturing added 0.94%. The remaining 21 sectors fell sharply. Machinery and equipment dropped 42.34%, metals declined 38.28%, and construction fell 37.18%. Securities lost 34.74%, while transportation equipment and parts declined 25.94%. Paper and wood products fell 25.82%, general services dropped 25.56%, and chemicals declined 24.52%. Utilities fell 22.95%, non-metallic minerals lost 20.57%, and entertainment and culture dropped 19.42%. Real estate declined 17.53%, telecommunications fell 13.76%, and IT services lost 12.33%. Textiles and clothing dropped 11.95%, food and tobacco fell 11.73%, and pharmaceuticals declined 11.19%. Transportation and warehousing lost 10.52%, medical and precision equipment fell 10.41%, finance dropped 3.04%, and distribution declined 2.48%.
Hana Securities Analyst Predicts Continued Semiconductor Dominance
Lee Jae-man, a researcher at Hana Securities, stated that sector rotation away from semiconductors remains difficult because semiconductor profit growth rates dominate the KOSPI's overall net profit increase average. Lee said, "It's a situation where it's difficult to overcome the wall of semiconductors. When looking at profits, sector rotation is not easy." He explained that "the peak of leading stocks is ultimately formed when the operating profit margin passes its peak," adding that "the operating profit margin peak for Samsung Electronics and SK Hynix is expected as early as the first quarter of next year, so semiconductors are likely to continue their role as the leading sector driving the market until the end of this year." Lee added, "It's not too late to respond after confirming that the operating profit margin has actually turned to a downward trend."
FAQ
What happened to the KOSPI between May 4 and July 14?
The KOSPI closed at 6856.83 on July 14, nearly unchanged from its May 4 level of 6936.99, representing a decline of 1.16%. However, this flat index performance masked severe losses in non-semiconductor sectors, with 21 of 24 sectors falling by double digits.
Why did non-semiconductor sectors decline while the KOSPI remained flat?
The semiconductor rally led by Samsung Electronics and SK Hynix supported the overall index, masking widespread weakness across other industries. This created an 'index illusion' where the headline number appeared stable while most sectors experienced significant losses.
