Domestic Stock Market Briefing — 2026-07-30

Today's Market Snapshot

The KOSPI has recorded a brutal decline, plummeting over 16% in the last two days alone. On the 28th, a circuit breaker was triggered after an early session drop of over 5% due to semiconductor weakness, and it was triggered again on the 29th following a 13% drop after SK Hynix reported poor earnings. Foreign investors have been selling off consistently, with monthly losses now exceeding 30%.

Investor Flows

• Foreigners: Sharp increase in net selling over the past two days. Massive exit from KOSPI on the 28th-29th due to AI bubble fears and semiconductor weakness. Net selling for July continues.
• Institutions: Institutional investors have shifted to a defensive stance and have turned to net selling.
• Retail: On the 29th, retail investors offloaded 1.4 trillion KRW, abandoning the "buy the dip" strategy and exiting the market together.

Major Stocks of the Day

Top 3 Declining Stocks

SK Hynix (000660): Down over 13%; poor Q2 earnings sparked fears of slowing AI demand, leading the semiconductor slump. Samsung Electronics (005930): Down over 13%; compounding losses over the last two days alongside a global chip downturn. NAVER (035720): Corrected after a slight rise; maintaining relative strength despite the broader weakness in growth stocks.

Sector Trends

Weak Sectors: Semiconductors, electronics, and telecommunications are the hardest hit. Secondary weakness spreading to power equipment and IT services. Growth stocks are generally slumping due to AI bubble concerns.

Rising Sectors: No specific data on rising sectors available. Defensive stocks are attempting a mild recovery but are overshadowed by the overall market decline.

Key Issues & Drivers

AI Bubble Fears and Semiconductor Weakness Deepen

• Context: Concerns over slowing AI demand have spread following SK Hynix’s poor Q2 performance. The slump in global chipmakers is deepening the weakness in Korea's semiconductor-led market.
• Market Impact: KOSPI dropped 16% over the 28th and 29th, with circuit breakers recurring. The structural vulnerability of the Korea stock market, highly dependent on semiconductors, is being exposed.

Simultaneous Exit of Foreign and Retail Investors

• Context: Continuous massive net selling by foreigners and a 1.4 trillion KRW sell-off by retail investors on the 29th signal the abandonment of the "buy the dip" strategy. The loss of market support has sapped upward momentum.
• Market Impact: With retail investors—the final line of defense—now selling, there is fear of further declines. Defending the KOSPI 5,600 line is becoming uncertain.

Increased Structural Volatility & Nasdaq Correlation

• Context: The 60-day correlation between KOSPI and Nasdaq 100 has risen to 0.50. The synchronization between global tech weakness and the Korean market is intensifying.
• Market Impact: Weakness in the Nasdaq is now immediately transmitted to the KOSPI. The Korean market is increasingly sensitive to shifts in FOMC monetary policy.

Macro & External Factors

• Exchange Rate (KRW/USD): Data not available. Potential for persistent won weakness due to the unwinding of the Yen-carry trade caused by the weak Yen.
• US Market: S&P 500 down 1.52%, Nasdaq down 1.74%. The worsening tech sector slump is a primary factor for the Korean market's decline.
• Global Chip Cycle: Concerns over an AI bubble and slowing memory chip demand may signal the end of the semiconductor supercycle, raising fears over poor Korean exports.

Checkpoints for Tomorrow

• Reconfirmation of FOMC policy stance and potential hints for a September rate cut.
• Monitoring for continued earnings shock concerns for SK Hynix and Samsung Electronics.
• Evaluating the effectiveness of new regulatory policies on retail leveraged ETFs.
• Assessing psychological boundary levels based on the defense of the 5,600 mark.

Investor Guidelines

• Short-term: High risk of further semiconductor declines. Expectations for tech stock short-covering are weak. Defensive positioning is essential given the lack of clear buy signals.
• Mid-to-long term: It will take time to transition from the AI bubble debate to fundamental earnings improvements. Structural improvements to reduce the semiconductor bias in the Korean market are needed.
• Risk Factors: (1) Further Nasdaq decline, (2) Deepening semiconductor slump, (3) A vicious cycle of forced liquidations due to increased retail leverage losses.

Expert Comments

Bloomberg: "With Korean retail investors exiting en masse due to AI bubble fears, the market's support base has completely collapsed. We are witnessing the realization of the end of the semiconductor supercycle."

Reuters: "SK Hynix's poor earnings serve as a trigger for cooling AI demand, and the KOSPI’s 30% monthly drop makes it one of the worst-performing markets globally."