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| HSI1 | 25,884.43 | 0.00 | -- |
| HSCEI1 | 8,612.15 | 0.00 | -- |
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2026-07-30 12:44:33 CLSA said in a report that the sentiment-driven crash in the South Korean stock market has so far gained more fundamental substance after SK hynix (000660.KS) reported 2Q sales and EBIT below expectations. Amid market concerns over competition from Chinese large language models and semiconductors, pricing by US frontier AI labs, closed-loop financing, and the resilience of capital expenditure by hyperscale computing service providers, South Korean memory makers attempted to reassure the market with guidance pointing to strong memory demand and long-term contracts, but failed to stop retail investors from rushing for the exits. The broker had previously suggested that a shakeout of retail investors could pave the way for a healthier, less volatile, institution-led rebound. The broker turned Overweight on South Korea in early October 2025 when the KOSPI stood at 3,500 points, and took profit on half of the position on 21 May when the KOSPI reached 8,000 points. It is currently still seeking better exit points for the remaining Korean holdings. Since 22 June, the KOSPI Index has fallen 38% in just 27 trading days, making it one of the more notable market crashes in history, while today's price action pushed the 14-day RSI down to the 30 level, entering oversold territory. Retail investors, who have injected substantial unnecessary volatility into the Korean stock market since March, are now showing signs of capitulation. The broker noted that assets in leveraged Korean ETFs have shrunk 62% from the peak on 22 June, while the extreme ETF trading volume seen on 29 July may signal a final wave of forced selling. Foreign holdings have now been substantially reduced, with active Overweight positions only 0.4 ppts above MSCI levels, compared with 2 ppts in May, leaving ample room for reaccumulation. The broker believes there remains a fundamental computing power gap and ample room for AI applications. Average selling prices and EBIT margins for memory manufacturers are still expanding, while earnings revisions in the South Korean market continue to deliver positive surprises, signaling a solid EPS growth trajectory consistent with global semiconductor sales. The market is no longer excessively priced relative to macro fundamentals and is trading at a historically cheap 12-month forward P/E of 4.5x.(ha/da)~ AASTOCKS Financial News Website: www.aastocks.com This article was automatically translated by AI, the Chinese version should be considered the authoritative version. AASTOCKS.com Limited does not guarantee its accuracy or completeness and accepts no liability for any damages or losses arising from the use of this translation. | |