Markets

The Kospi Fell 3.7% on Thursday and SK Hynix Lost 5.6% as Lam Research's Reaction Reached Seoul. The Bank of Korea Held at 3%, the Nikkei Fell 2.2% and the Hang Seng Nearly 3%

A day after rising 3.29% to 5,735.66, Seoul's Kospi opened 1.1% lower on October 22 and closed down 3.67% at 5,524.94, after a low of 5,485.98, as Lam Research fell 6% in New York's after-hours market on a record quarter and guidance above consensus. SK Hynix lost 5.56% to 1,222,000 won and Samsung Electronics 3.80% to 215,000 won, giving back most of Wednesday's gains; the Kosdaq fell 3.57%. The Bank of Korea held its base rate at 3.00%, as every economist expected. The Nikkei 225 closed 2.16% lower at 63,223.87, Taiwan fell 1.81%, the Hang Seng was down 2.85% in the afternoon, and Brent crude was back above $111.

The Korean chip trade has now moved more than 3% on three consecutive days, each time on news from somewhere else. The Kospi, which had fallen 3.73% on Tuesday and risen 3.29% on Wednesday, opened at 5,670.11 on Thursday, October 22, down 1.1%, after Lam Research's report in New York, and fell through the day: it traded as high as 5,740.28 in the first minutes, as low as 5,485.98 in the last hour, and closed at 5,524.94, down 210.72 points, or 3.67%. SK Hynix fell 5.56% to 1,222,000 won and Samsung Electronics 3.80% to 215,000 won, erasing most of Wednesday's gains of 5.81% and 5.67%, and the Kosdaq lost 3.57% to 764.49. The won was steady near 1,324 per dollar. Thursday's close put the index back below where it finished on Tuesday, when a Korean AI data-centre IPO had fallen 32% on its first day.

The Bank of Korea did what every economist polled by Reuters expected and held its base rate at 3.00%, after quarter-point increases in July and August; most still see a move to 3.25% in November, with chip exports strong and inflation above target. The decision did not move the market, because the market was trading New York. Lam Research, the equipment supplier whose December-quarter guidance is the first read on how fast Samsung and SK Hynix are ordering tools, had guided above consensus and fallen 6% after hours anyway, and the lesson Seoul drew was that a beat is no longer enough for the chip trade. Binance's tokenised SK Hynix pair, SKHYB, had already told the story overnight, sliding from $143.70 at the US close to $137.29 by 05:40 UTC, and the tokenised iShares Korea ETF, EWYB, from $156.80 to $152.20.

The rest of the region fell with it. Tokyo's Nikkei 225 closed down 2.16% at 63,223.87 after briefly trading higher at the open, with a low of 62,916.83; Taiwan's Taiex fell 1.81% to 46,041.43; Hong Kong's Hang Seng was down 2.85% at 22,976.67 in the afternoon, heading for a third straight decline, and Shanghai was 1% lower, extending a ten-week losing streak. New Zealand's third-quarter inflation came in at 3.7%, below the 3.8% expected, and the market still prices a near-certain Reserve Bank hike next week. Oil did not help: Brent was back above $111 in the Asian session, at $111.08 by 05:00 UTC, and WTI at $98.93, on reports of US-Israeli plans for renewed strikes on Iran after the US midterm elections and after Iran's foreign minister wrote in the Financial Times that the Strait of Hormuz "will not be open to everyone" until an understanding is reached. Gold fell 1.06% to $4,106 an ounce and Nasdaq 100 futures were down about 1.3%, judging by the tokenised QQQB pair.

What Thursday adds to the week is a pattern. The Kospi fell 3.73% on Tuesday on a Korean IPO and SK Hynix's slide, rose 3.29% on Wednesday on SpaceX and Super Micro, and fell 3.67% on Thursday on Lam Research: three sessions, three moves of 3% or more, none of them on Korean data, and the Bank of Korea's decision, the one Korean event of the week, moved nothing. The next cue is Friday's flash PMIs and, more to the point, Alphabet and Microsoft's capital-spending lines on October 28. Until then the Korean chip index is a 24-hour instrument that happens to close at 3:30 p.m. in Seoul, and the overnight tokenised prices, which were down before the opening bell, have been a better guide to the open than anything published in Korea.