#kospisinks3.52%tolowestclosesinceapril $SKHYB KOSPI just dropped 3.5% in one day. Is the memory chip trade over? 📉📉
On Oct 22, the KOSPI closed down 3.52% at 5,533.77, its lowest since April. SK Hynix fell nearly 6% and Samsung fell 4%.
The KOSPI is basically a memory chip index. When Samsung and SK Hynix drop, everything drops.
Earlier this year, AI demand for memory chips sent the KOSPI past 9,300, more than double where it started the year. It's now down about 40% from that peak.
Three things drove this drop. The market is starting to doubt that all the AI spending will pay off. Samsung and SK Hynix have mostly finished their big share buybacks, so that support is gone. And the Bank of Korea didn't rule out raising rates later.
The most interesting part is what Korean retail investors did. While the KOSPI kept hitting new highs, they were selling heavily, and a lot of them moved their money into US stocks. So the higher the market went, the fewer retail investors were left in it. The biggest winner turned out to be the Korean government, because record trading volume pushed securities transaction tax revenue to a record high too.
What happens next depends on whether US tech giants keep spending on AI. If they pull back, Korean stocks will have a hard time holding up.