KOSPI closed at 7656.31 on July 7, down 395.02 points or 4.91%, marking a sharp decline in Korean stocks this month. In just 5 trading days this month, KOSPI's market capitalization decreased by approximately 663 trillion won, falling from 6929.5408 trillion won at the end of the previous month to 6266.4122 trillion won. The decline followed profit-taking in semiconductor stocks despite record earnings, with investors citing concerns over AI investment cycle sustainability after Meta-driven supply glut fears. The market had previously expected a summer rally based on strong semiconductor fundamentals and second-quarter earnings, but the rapid drop has shifted sentiment from optimism to caution.
KOSPI Market Cap Drops 663 Trillion Won in Five Trading Days
According to Korea Exchange data, KOSPI's market capitalization fell by approximately 663 trillion won this month. The market cap stood at 6929.5408 trillion won at the end of the previous month and declined to 6266.4122 trillion won as of the previous trading day. This loss exceeds the entire KOSDAQ market cap of 467.7225 trillion won and surpasses the combined market cap of KOSPI's 3rd to 8th largest companies—Samsung Electro-Mechanics, Hyundai Motor, LG Energy Solution, Samsung Life Insurance, and Samsung C&T—which totals 621.7402 trillion won.
KOSPI reached a record intraday high of 9385.59 in the previous month after breaking above 9000 for the first time. However, the index has since fallen nearly 10% in just 5 trading days this month, dropping from 8476.48 at the end of the previous month to the 7650 level.
Market Expected Summer Rally Based on Semiconductor Earnings
Market participants had anticipated a summer rally following consolidation near 9000 points in the previous month. The expectation was based on continued momentum in semiconductor stocks, which led index gains in the first half of the year. As second-quarter earnings season began with Samsung Electronics, investors expected large-cap semiconductor earnings momentum to drive the market to new highs.
However, the sharp decline from the start of the second half has replaced optimism with disappointment. Following Meta-driven concerns over AI supply glut, semiconductor stocks experienced significant volatility, weakening expectations for the AI investment cycle. Profit-taking intensified even after Samsung Electronics reported record second-quarter results, with investors citing "material exhaustion" as a reason for selling pressure. The market's weak response to strong earnings has led some to describe the situation as a "horror rally" rather than a summer rally.
Analysts View Decline as Short-Term Correction with Valuation Support
Securities firms largely view the decline as a short-term correction rather than a trend reversal. The AI investment cycle and semiconductor industry improvement outlook remain intact, suggesting the correction presents a buying opportunity.
Lee Kyung-min, a researcher at Daishin Securities, stated, "While concerns about weakening fundamentals have been raised amid the sharp decline in the domestic stock market, they have not materialized. Instead, fundamental strength is becoming visible through earnings improvements, forecast upgrades, and GDP growth rate revisions. In this context, a sharp decline driven by supply-demand factors represents an opportunity to increase positions."
Regarding the index's decline to near 7300, analysts note extreme undervaluation. Lee explained, "KOSPI at 7300 represents a forward P/E ratio of 6.3x, approaching the low point during the financial crisis (6.27x). Given the extreme undervaluation, upside potential from valuation normalization alone is significant, while downside risk appears limited."
Kang Jin-hyuk, a researcher at Shinhan Investment Securities, noted, "KOSPI has historically triggered 12 circuit breakers, with half occurring this year and 4 concentrated in just the past month. The current KOSPI 12-month forward P/E is below 6.7x, approaching the valuation low point (6.65x)." Kang added, "Past P/E lows below 7x occurred in 2002 (5.5x), 2003 (5.36x), 2004 (5.47x), and 2008 (6.27x). Unless we assume the end of the AI cycle or downward earnings revisions, KOSPI valuation is at its lowest since the financial crisis, making low-price buying potentially effective."
FAQ
What caused KOSPI stocks to drop 10% in July 2026?
KOSPI fell nearly 10% in just 5 trading days this month due to profit-taking in semiconductor stocks despite record earnings. Investors cited concerns over AI investment cycle sustainability following Meta-driven supply glut fears, leading to intensified selling pressure even after Samsung Electronics reported strong second-quarter results.
How much market value did KOSPI lose in five trading days?
KOSPI's market capitalization decreased by approximately 663 trillion won in 5 trading days this month, falling from 6929.5408 trillion won at the end of the previous month to 6266.4122 trillion won as of July 7. This loss exceeds the entire KOSDAQ market cap of 467.7225 trillion won.
Do analysts view the KOSPI decline as a buying opportunity?
Securities firms largely view the decline as a short-term correction rather than a trend reversal. Analysts note that KOSPI's forward P/E ratio has fallen below 6.7x, approaching historical lows near 6.65x seen during the financial crisis, suggesting extreme undervaluation and potential buying opportunities given intact AI cycle and semiconductor fundamentals.
