Markets
Samsung Lost 17.8% and SK Hynix 24.3% Last Week, Their Worst Since 2008. Foreign Investors Sold 11.2 Trillion Won of Korean Stocks
Samsung Electronics fell from 262,000 to 215,500 won and SK Hynix from 1.681 million to 1.272 million won in the week to October 16, their steepest weekly declines since the 2008 financial crisis. Foreign investors sold a net 11.2 trillion won ($7.8 billion) of Kospi shares, 79% of it in those two stocks, and foreign ownership of Samsung fell to 45.98%, the lowest since 2009.
The two companies that make most of the world's memory chips have just had their worst week in eighteen years. Samsung Electronics fell 17.8% between October 12 and October 16, from 262,000 won to 215,500 won, the steepest weekly drop since the fourth week of October 2008, when it lost 19.3%. SK Hynix fell 24.3%, from 1,681,000 won to 1,272,000 won, its worst week since the third week of November 2008, when it lost 31.9%. On Thursday alone, the day the Kospi fell 7.57% and tripped its circuit breaker, Samsung lost 9.48% and SK Hynix 11.06%.
The selling came from abroad. Foreign investors sold a net 11.2068 trillion won, about $7.8 billion, of shares on Korea's main board last week, according to Korea Exchange data compiled by the Seoul Economic Daily. Samsung accounted for 3.4763 trillion won of that and SK Hynix for 5.3565 trillion won: 78.8% of all foreign net selling went through two stocks. Foreign ownership of Samsung fell to 45.98% on October 16, its lowest since July 2009; of SK Hynix to 48.85%, the lowest since December 2021. Daily foreign net selling had averaged close to 2 trillion won earlier in the month and reached 4.59 trillion won on October 13 and 3.77 trillion won on October 15.
Domestic buyers could not absorb it. Individuals bought a net 4.312 trillion won over the week and institutions 3.418 trillion won, and the National Pension Service, which holds 7.84% of Samsung and 7.32% of SK Hynix, bought only modestly; a parliamentary audit heard that the fund had expanded its permitted allocation to domestic equities during the first-half rally and had little room left to add. The Korea Times put the problem plainly on Sunday: there was no one left to buy the dip. The Kospi's forward price-to-earnings ratio fell to a 26-year low, by KED Global's reckoning, and JPMorgan called the valuation a record low while adding that it saw no catalyst for a rebound.
Monday provided a first test. Samsung opened at 207,000 won, down 3.9%, and SK Hynix at 1,212,000 won, down 4.7%; both reversed within the first two hours as institutions bought a net 107.4 billion won of Samsung and 106.4 billion won of SK Hynix by 10 a.m. and foreign investors turned net buyers for a second session. Samsung closed at 217,750 won, up 1.04%, and SK Hynix at 1,272,000 won, exactly unchanged, after highs of 219,500 and 1,277,000 won. The reversal does not change the week's arithmetic: SK Hynix is still 24% below where it began last week.
The case for a floor rests on earnings that have not been cut. Analysts raised profit forecasts for both companies during the sell-off, TrendForce projects double-digit DRAM price increases in the fourth quarter, and ASML said its customers' medium- and long-term demand outlook was improving. The case against is that none of that is new, and the stocks fell anyway because the buyers of those chips, the companies building AI data centres, are financing the build-out with debt that the market repriced last week. Lam Research and Meta report on Wednesday; Samsung's full third-quarter results are due at the end of the month. As one industry official told the Seoul Economic Daily, the earnings will decide whether this was a correction or a turning point.