South Korea's KOSPI index fell sharply by more than 4% on July 20 as trading resumed following the Constitution Day holiday. The index reached a low of 6,498 points before recovering some losses.
The decline pushed the KOSPI more than 25% below its June peak, officially entering a technical bear market. Market pressure intensified due to concerns in the chip sector combined with escalating tensions between the US and Iran.
Chip Stocks and Foreign Investor Activity
Shares of Samsung Electronics and SK Hynix opened down over 5% amid the sell-off, though foreign investors stepped in to buy, acquiring a net 278.4 billion won ($187.1 million), mostly in electronics stocks. Meanwhile, retail investors sold a net 300.8 billion won in early trading.
Han Ji-young, a researcher at Kiwoom Securities, noted that the steep declines in major stocks like Samsung Electronics, SK Hynix, and Samsung Electro-Mechanics, which fell between 30% and 40%, have amplified selling pressure. The Philadelphia Semiconductor Index also dropped 4.3%, reflecting global chip sector jitters heightened by competition from Chinese AI models.
Currency and Oil Market Impact
The Korean won weakened against the US dollar, opening at 1,488.3 won per dollar, as concerns over the Middle East conflict increased. Rising oil prices added to inflationary pressures, especially after the Bank of Korea implemented its first interest rate hike since 2023. The ongoing tensions raised fears of disruptions to the Strait of Hormuz, a critical oil shipping route.
Analysts are watching upcoming earnings reports from US tech giants such as Alphabet, Microsoft, Meta, and Amazon, scheduled before the end of July. Their capital spending guidance may influence whether chip stocks stabilize or continue to fall.
This material is for informational purposes only and does not constitute financial advice.
