KOSPI stocks fell approximately 15% this month, dropping from 8591.50 on the 1st to around 7000 amid panic selling. The decline resulted from overlapping semiconductor concerns, geopolitical risks, and leverage liquidation. Major Korean brokerages diagnosed the drop as excessive correction driven by supply-demand shocks rather than fundamental deterioration, recommending investors increase positions as 12-month forward PER reached 6.17x, below the 2008 crisis level of 6.27x.
KOSPI Records 15% Monthly Decline from 8591 to 7000 Level
KOSPI started the month at 8591.50 on the 1st and declined daily except for the 3rd, dropping to the early 7000s. The rapid stock price decline triggered panic selling among investors, with investment sentiment rapidly freezing. Market expectations of KOSPI reaching 10,000 that prevailed until last month have been replaced by fear dominating the market.
Securities Firms Identify Supply-Demand Shock Over Earnings Deterioration
Major securities firms diagnosed the recent plunge as excessive correction rather than trend damage. Daishin Securities characterized the decline as supply-demand shock resulting from semiconductor concentration and leverage investment liquidation, rather than corporate earnings deterioration. Despite KOSPI falling over 20% from its peak, 12-month forward earnings per share (EPS) continued its upward trend. Long-term earnings forecasts for Samsung Electronics and SK Hynix are being revised upward.
KOSPI Forward PER Falls to 6.17x Below 2008 Crisis Level
KOSPI's 12-month forward price-to-earnings ratio (PER) dropped to 6.17x, lower than the 6.27x bottom during the global financial crisis. Daishin Securities stated the market entered historical undervaluation territory, advising that split-purchase strategies utilizing volatility are effective. The firm presented 7000 as the support level, diagnosing any break below 7000 as temporary undershooting.
KB Securities noted the absence of individual investor net buying during the previous day's sharp decline. The brokerage interpreted this as panic selling rather than the usual bottom-fishing behavior individuals typically exhibit during sharp declines. Historical patterns show stock prices mostly recovered after periods when individual investor sentiment was extremely contracted.
Individual Investors Shift to Panic Selling During Decline
Technical indicators also suggest oversold conditions. KB Securities presented 7070 points, the 2x price-to-book ratio (PBR) level, as the key support line, stating the stock market principle that "broken resistance becomes support" likely remains valid. The firm emphasized that the market's focus should be on absolute profit scale and sustainability of profit margins rather than earnings growth rates when judging semiconductor sector peaks.
Semiconductor Sector Outlook Remains Positive Despite Growth Rate Slowdown
Regarding semiconductor sector concerns cited as the direct cause of the correction, opinions emerged that market interpretation is excessive. KB Securities pointed out the market is interpreting the slowdown in semiconductor profit growth rate as a sector peak signal, but this interpretation overlooks base effects. The explanation notes that growth rate deceleration is natural after profits already surged nearly 1000%.
In SK Hynix's case, EPS growth rates peaked first in both 2013 and 2017, but stock prices formed peaks approximately 10 months and 9 months later, respectively. The analysis emphasizes that absolute profit scale and profit margin sustainability matter more than growth rates themselves.
Analysts Cite Q2 Earnings and US CPI as Upcoming Market Catalysts
Securities firms view the Q2 earnings season beginning in earnest next week and the US June Consumer Price Index (CPI) announcement on the 14th as major turning points that will shift market sentiment. Lee Kyung-min, researcher at Daishin Securities, stated: "This earnings season expects strong performance not only in semiconductors but also in non-semiconductor sectors and export stocks. Export momentum and exchange rate effects will drive balanced earnings improvement across semiconductor and non-semiconductor sectors, easing KOSPI concentration and acting as powerful upward momentum."
FAQ
What caused KOSPI stocks to fall 15% this month?
KOSPI fell from 8591.50 on the 1st to around 7000 due to overlapping semiconductor sector concerns, geopolitical risks, and leverage investment liquidation, according to securities firms.
Why do securities firms recommend buying despite the KOSPI decline?
Major brokerages diagnosed the drop as supply-demand shock rather than fundamental deterioration, noting 12-month forward EPS continues rising while forward PER dropped to 6.17x, below the 2008 crisis level of 6.27x, indicating historical undervaluation.
What are the key support levels identified for KOSPI stocks?
Daishin Securities presented 7000 as the support level, while KB Securities identified 7070 points (2x PBR level) as the key support line for KOSPI.
