South Korean stocks tumble as semiconductor fervor cools, KOSDAQ gains traction

South Korea's stock market witnessed unprecedented volatility last week, with the KOSPI index experiencing a circuit breaker halt on two consecutive days, followed by a surprising 18% surge on July 31st. However, the market turned bearish again on August 3rd, as major semiconductor stocks like Samsung Electronics and SK Hynix saw significant price drops of 7-8%. This downturn followed a massive buying spree by foreign investors on July 31st, where they net-purchased 7.2 trillion won worth of these semiconductor stocks. On August 3rd, foreign investors reversed their stance, becoming net sellers of 2.8 trillion won in these same stocks.

The fervor for domestic semiconductor stocks appears to be cooling, leading to a shift in investor sentiment. The trading volume for leveraged products tied to Samsung Electronics and SK Hynix plummeted from 12.4 trillion won on July 30th to 1.2 trillion won on August 3rd. This decline coincided with a sharp drop in the turnover ratio for these products from an average of 189.13% to 18.03%. Analysts suggest that the indiscriminate buying of semiconductor stocks by retail investors may subside for the time being.

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The indiscriminate buying of semiconductor stocks like before is expected to subside for the time being.

In contrast to the KOSPI's decline, the KOSDAQ index rose 2.44% on August 3rd, driven by inflows of funds from individual and institutional investors. The KOSDAQ even saw a "buy-side car" activation during trading, highlighting a distinct divergence from the KOSPI's performance. This shift in capital is attributed to a rotation of funds from semiconductors into sectors like pharmaceuticals, biotechnology, and robotics, which are now showing strength.

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Supply and demand concentrated in semiconductors are moving to the pharmaceutical and bio, and robot industries, showing strength.