South Korea's KOSPI index experienced a decline of 0.5% on Monday as profit-taking activities emerged among investors, particularly in semiconductor stocks, following last week's market rally. The downturn was led by notable falls in major tech shares, including a more than 4% drop for SK Hynix and a 1.5% decline for Samsung Electronics.

Market Overview

The tech-heavy markets in Japan and South Korea saw significant pullbacks, with Japan’s Nikkei 225 also reporting lower values. In mainland China, the CSI 300 index fell by 0.6%, while Taiwan's main index remained largely unchanged. The KOSPI Composite Index has surged approximately 86% year-to-date, making it the top-performing equity market in Asia for the first half of 2026, predominantly driven by AI memory chip stocks.

Investor Behavior and Stock Movements

During this sell-off, foreign investors were net sellers of Korean shares, liquidating approximately 828.8 billion won in equities on Monday. The South Korean won weakened by 0.3% against the US dollar. Concurrently, battery manufacturer LG Energy Solution experienced a nearly 4% slump, and MediaTek saw a 1.4% reduction in shares traded in Taipei.

Positive Developments Amidst the Decline

Despite the overall negative trend, Foxconn (Hon Hai Precision Industry) posted a 0.6% gain, backed by record revenues in June and the second quarter driven by robust demand for AI servers. Additionally, SK Hynix is preparing to offer 17.79 million new shares through American depositary receipts, a deal valued at around $29 billion, on the Nasdaq.

Goldman Sachs remains optimistic regarding South Korea's market, projecting a more than 20% upside for the KOSPI over the next year, with a target of 12,000. The investment bank forecasts substantial earnings growth of 320% in 2026 and a further 35% in 2027, indicating that the rally may expand beyond AI chip stocks into sectors such as energy and materials.

Outside of the semiconductor sector, markets in Hong Kong, Indonesia, and India remained more positive, with Hong Kong's Hang Seng rising by 0.9% and Indonesia's benchmark gaining 0.8%.