TLDR
- South Korea’s Kospi dropped nearly 9%, dragged down by SK Hynix falling 15% and Samsung tumbling 11% after SK Hynix’s Nasdaq debut
- SK Hynix raised $26.5B on Friday listing at $149 per share, but investors sold off once the event completed
- US-Iran tensions worsened after Iran shut the Strait of Hormuz, triggering US airstrikes and Iranian counterstrikes
- Brent crude hit $79 and WTI hit $74.30 as energy markets reacted to Middle East conflict
- US chip stocks including Micron, Nvidia, AMD, and Western Digital all fell premarket Monday
SK Hynix made a blockbuster debut on the Nasdaq on Friday, raising $26.5 billion by selling 177.9 million American Depositary Receipt shares at $149 each. The stock surged about 13% on its first day. But by Monday, the mood had shifted entirely.
The South Korean memory chip maker plunged around 15% on the Korea Exchange on Monday. Samsung Electronics fell nearly 11%. Together, they pulled South Korea’s Kospi Composite Index down by about 9%, pushing it to its lowest level since May.
“Buy the Rumor, Sell the News” in Full Effect
Analysts say the post-listing selloff follows a classic market pattern. Investors buy ahead of a major event, then sell once it happens. SK Hynix stock had rallied before its US listing and dropped once the debut was complete.
A senior analyst at NH Investment & Securities said investors were profit-taking after the listing. He also said sentiment was hit by caution around the company’s second-quarter earnings.
SK Square, which holds a large stake in SK Hynix, fell 15%. Samsung Electro-Mechanics dropped 17%, just a week after forming a $310 million joint venture with Japanese firm Sumitomo to produce glass cores for next-generation chips.
The Kospi has now fallen 26% from its year-to-date high of 9,387. It slipped below key support levels and the 50-day moving average. The next key support level sits around 5,850.
US Chip Stocks Caught in the Crossfire
The selloff spread to US markets before Monday’s open. Micron Technology fell nearly 6% premarket. Western Digital and Sandisk each dropped about 7%. Seagate fell close to 5%.
Nvidia slipped about 2%. Advanced Micro Devices fell nearly 3%. Qualcomm and Broadcom each declined around 2%.
Chip equipment makers were also hit. Lam Research, Applied Materials, and KLA each fell around 3%. ASML, set to report earnings Wednesday, dropped nearly 2%.
Taiwan Semiconductor, which reports second-quarter results Thursday, was also in the red. Arista Networks was one of the few stocks to trade in positive territory.
Geopolitics Adding Pressure
The Kospi decline was worsened by rising tensions between the US and Iran. Iran closed the Strait of Hormuz over the weekend, which the US responded to with airstrikes. Iran then struck US military bases in Jordan and Gulf countries.
South Korea imports heavily from the Middle East, making it sensitive to oil price moves. Brent crude rose to $79 and WTI hit $74.30.
The South Korean central bank is expected to hike interest rates by 0.25% on Wednesday. Rising energy costs and higher wages in the chip sector are driving inflation, and the won recently hit a record low before recovering to 1,507 against the dollar.
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