Foreign selling, chip profit-taking and a wait-and-see mood ahead of Samsung’s earnings pushed the KOSPI down 1.98%
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On October 7, South Korea’s KOSPI fell 137 points, or 1.98%, to close at 6,803.90. The KOSDAQ also dropped 2.34%. The biggest driver was foreign investors. They net sold about 2.6 trillion won of KOSPI shares, and more than 3.1 trillion won when trading on the alternative venue Nextrade is included. The selling was concentrated in chip heavyweights such as Samsung Electronics and SK Hynix. Investors were also waiting for Samsung’s third-quarter preliminary earnings, expected on October 8, while oil prices and U.S. Treasury yields added pressure. Retail investors bought more than 2.5 trillion won but could not stop the slide. The market expects Samsung’s operating profit to top 100 trillion won, so tomorrow’s release is likely to set the short-term direction.
The day after Wall Street set new record highs, Korea’s benchmark index moved the other way. The S&P 500 and Nasdaq closed at records in New York on October 6, yet the KOSPI slid to the 6,800 level on October 7. There was no single reason. Four factors overlapped: foreign selling, profit-taking in chip stocks, a wait for Samsung’s earnings, and pressure from oil prices and bond yields. Let’s go through them one by one.
The Market at a Glance: A Rebound Attempt That Fell Short
According to the Korea Exchange, the KOSPI closed at 6,803.90 on October 7, down 137.49 points (1.98%) from the previous session. The KOSDAQ ended at 898.43, down 21.49 points (2.34%). The KOSPI opened at 6,864.25 (-1.11%) and at one point recovered to 6,977.77, but foreign selling picked up again and the losses widened.
Looking back, the index crossed 7,000 on October 2 with a close of 7,003.74. It then fell to 6,941.39 (-0.89%) on October 6, right after the holiday break, and to 6,803.90 on October 7. The KOSDAQ climbed to 919.92 on October 6 but gave up the 900 level the next day. The won closed at 1,340.40 per dollar, down 3.2 won on the day.
Reason 1: Heavy Foreign Selling Focused on Chips
The flow data point clearly in one direction. On the main KOSPI market, foreign investors net sold 2.5974 trillion won and institutions net sold 672.7 billion won, while individuals net bought 2.5610 trillion won. Adding trades on the alternative venue Nextrade, foreign net selling was 3.1095 trillion won, institutional net selling was 859.8 billion won, and individual net buying was 3.2616 trillion won.
The selling also continued on October 6. Business Korea reported that foreign investors net sold 1.7509 trillion won that day, so the two-day total exceeds 4 trillion won. The sell orders were concentrated in the biggest chip names. Samsung Electronics fell 1.29% to 268,500 won and SK Hynix fell 2.82% to 1,723,000 won. Samsung Electro-Mechanics (-4.24%), Hyundai Motor (-3.45%) and Samsung Biologics (-2.52%) also declined.
The KOSDAQ followed a similar pattern. Foreign investors net sold 325.9 billion won and institutions 226.6 billion won, and semiconductor equipment makers Jusung Engineering (-11.13%) and Wonik IPS (-7.22%) fell sharply. Brokerages read the move as the chip rally taking a breather, which triggered selling in large caps. A report on October 6 likewise described the heavy foreign buying in Samsung and SK Hynix as being worked off ahead of the third-quarter earnings season.
Reason 2: A Wait-and-See Mood One Day Before Samsung’s Earnings
Samsung Electronics is expected to release its third-quarter preliminary results on October 8. Yonhap Infomax compiled broker forecasts published within the past month and arrived at a consensus of 200.26 trillion won in revenue and 105.41 trillion won in operating profit. Some tallies put operating profit in the 108 trillion won range. With second-quarter operating profit at 89.5 trillion won, the market is pricing in a very large jump in a single quarter. If the forecasts hold, it would be a fourth straight quarter of record revenue and operating profit.
The optimism rests on the start of mass production of sixth-generation high-bandwidth memory (HBM4) and rising memory prices. Some analysts note that a stronger won has lowered expectations somewhat. Ahead of a high-stakes event, it is common to see both investors waiting for the result and others taking profits. Wednesday’s decline appears to fit that pattern.
Reason 3: Oil and U.S. Yield Pressure, and the Gap with Wall Street
On October 6, U.S. stocks rose on steadier oil prices and lower Treasury yields. The S&P 500 closed at 7,818.93 and the Nasdaq at 27,599.79, both records. The 10-year Treasury yield also came down from its highest level since 2002. Even so, Daishin Securities said Korean stocks weakened again on October 7 on higher oil prices and U.S. yields.
Risks remain. Brent crude closed at $100.58 a barrel on October 6, and U.S.-Iran talks over the Strait of Hormuz are at an impasse. The Federal Reserve raised its policy rate by 0.25 percentage point last month to 3.75%-4.00%. CME FedWatch shows a 78% probability of a hold this month, but a December hike is still largely priced in. The fact that Wall Street’s strength did not carry over to Seoul appears to reflect the greater weight of foreign flows and the Samsung event amid this uncertainty.
The Index Fell, But Some Stocks Rose
Not everything declined. LG Energy Solution gained 0.26% and KB Financial rose 0.96%, holding up relatively well. Shinhan Investment analyst Kang Jin-hyuk said money rotated into cosmetics stocks on the KOSPI, supported by strong exports and third-quarter earnings expectations, and into entertainment and beauty stocks on the KOSDAQ. Part of the money that had piled into chip heavyweights appears to be moving into other sectors.
What to Watch Tomorrow
- Whether Samsung’s operating profit beats the consensus of about 105 trillion won
- Comments on HBM4 and any additional shareholder-return measures
- Whether foreign flows turn from selling to buying after the release
Notes for Investors
- Foreign selling was large, but it is too early to say whether it is profit-taking or a lasting exit. Follow the flows in the coming sessions.
- The Samsung consensus is an average of pre-release broker forecasts and may differ from the actual preliminary figures. Shares can fall even when results meet expectations, or rise on a slight miss.
- External variables such as oil prices, U.S. rates and Middle East talks remain large. In a volatile market where the index moves about 2% a day, staged entries and position sizing matter.
- This article is for information only and is not a recommendation to buy or sell any security. Investment decisions and responsibility rest with the investor.
In short, Wednesday’s KOSPI drop was the combined result of foreign selling in chip heavyweights, a wait-and-see mood before Samsung’s earnings, and pressure from oil and yields. Attention now turns to Samsung’s preliminary results on October 8. The outcome could shift the direction of chip stocks and foreign flows, so it is worth watching the market’s reaction calmly after the release.
References
- Newspim, “[Market Close] Wait-and-See Ahead of Samsung Earnings… KOSPI Closes at 6,803” (newspim.com, Korean)
- Hankyung (Korea Economic Daily), “Chips Take a Breather… Foreign Selling of 3 Trillion Won Leaves KOSPI Barely Above 6,800” (hankyung.com, Korean)
- Shinailbo, “[Market Close] Despite Record U.S. Stocks… Foreigners and Institutions Sell, KOSPI Ends at 6,800 Level” (shinailbo.co.kr, Korean)
- Business Korea, “[Market Close] 1.7 Trillion Won Foreign Sell-Off Drags KOSPI Below 7,000; KOSDAQ Jumps 3%” (businesskorea.co.kr, Korean)
- Newspim, “Wall Street Rises on Stable Rates and Earnings Hopes… S&P 500 and Nasdaq at Records” (newspim.com, Korean)
- Pinpoint News, “Can Samsung Top 100 Trillion Won in Quarterly Operating Profit? Preliminary Q3 Results on the 8th” (pinpointnews.co.kr, Korean)
- Money Today, “The ‘Dream Number’ of 100 Trillion Won Operating Profit Is Within Reach: Samsung Earnings D-3” (mt.co.kr, Korean)