Kospi Drops 4% as Samsung, SK Hynix Slide; Barclays Bullish

The Kospi Index retreated more than 4% on July 20, closing at 6,525, after sharp declines in shares of Samsung Electronics and SK Hynix weighed on the market. Barclays and UBS analysts said leading semiconductor names still have upside due to strong demand.

Samsung Electronics has fallen about 34% from its high this year and was trading near its lowest level since May 6. SK Hynix has dropped roughly 40% from its peak. The weakness has extended beyond South Korea: Japanese memory company Kioxia has declined steeply and sector-focused ETFs have retreated, with the Roundhill Memory DRAM ETF falling from a record high of $81 to about $52 while major semiconductor funds also pulled back.

A Barclays analyst wrote, “Demand for compute continues to exceed available supply, while capacity constraints along the supply chain are unlikely to ease quickly.” A UBS analyst noted, “The selling is more passive and not aggressive and it seems more like trimming of positions rather than investors trying to leave the space.” Both banks pointed to limited capacity and strong order books, with many chipmakers reporting products sold out for the year.

Investors are awaiting upcoming earnings from large technology companies for details on capital expenditure plans. Samsung and SK Hynix together account for a large share of the Kospi; continued spending on servers, data centers and artificial-intelligence hardware would support demand for memory chips.

Geopolitical tensions also affected markets. Over the weekend the United States carried out strikes and Iran launched attacks, actions U.S. officials reported resulted in casualties. Brent crude rose above $90 on Monday. Higher oil prices increase pressure on consumer prices in energy-importing countries such as South Korea and are a factor the Bank of Korea monitors when setting policy.

Technical indicators showed further downward movement. The Kospi fell below its 38.2% Fibonacci retracement level and beneath the 50-day exponential moving average. The Average Directional Index rose to around 24. Some chart analysts identified the 61.8% retracement as a potential downside reference point if selling continues.

Market participants said the near-term trajectory will depend on the tone of corporate spending disclosed in upcoming earnings and on developments in the Middle East. Heavy losses in Korea’s largest stocks pushed the market deeper into a pullback while some sell-side analysts maintain a cautiously constructive view on semiconductor fundamentals.