KOSPI stocks fell 5.35% on July 8, closing at 7246.79 as the index dropped 409.52 points and market capitalization fell below 6,000 trillion won for the first time since May 20. The decline occurred despite Samsung Electronics reporting 90 trillion won in quarterly operating profit, as peak-out concerns triggered profit-taking and leverage ETF supply distortions amplified selling pressure. Middle East conflict reignition further chilled investor sentiment, with circuit breakers triggering during trading as panic selling spread across both KOSPI and KOSDAQ markets.
KOSPI Stocks Fall Below 6,000 Trillion Won Market Cap
According to the Korea Exchange on the 9th, KOSPI closed at 7246.79 the previous day, down 409.52 points (5.35%). Market capitalization shrank to approximately 5,931 trillion won, falling below the 6,000 trillion won threshold. This marked the first time market cap dropped below 6,000 trillion won on a closing basis since May 20, approximately seven weeks prior.
Both KOSPI and KOSDAQ indices plunged simultaneously during trading, triggering program trading sell-side sidecar (circuit breaker) mechanisms on both markets. The index had broken through 9,300 intraday the previous month, raising expectations for reaching the 10,000 level, but reversed into panic mode in less than one month.
Samsung Electronics 90 Trillion Won Profit Fails to Support Market
Samsung Electronics announced quarterly operating profit reaching 90 trillion won, the largest quarterly result in company history, but market reaction remained cold. Profit-taking sales poured out amid peak-out concerns, dragging down share prices. The decline in semiconductor bellwethers Samsung Electronics and SK Hynix, which had been supporting the index, spread panic-selling psychology among investors.
Leverage ETF supply distortions added to the selling pressure. In a situation where investor sentiment had frozen due to Middle East conflict reignition, index declines triggered additional selling in semiconductor leverage ETFs, leading to two consecutive days of panic market conditions.
Securities Firms Call Current Levels Buying Opportunity
Securities firms assessed the sharp decline as excessive adjustment due to supply shock rather than fundamental deterioration, advising investors to use current levels as an opportunity to increase positions.
Seo Sang-young, researcher at Mirae Asset Securities, stated: "While anxiety about the semiconductor sector underlies the sharp shake in domestic stocks, considering that US futures are still showing strong rebound sentiment despite narrowing gains, the possibility of continued declines in domestic stocks is limited."
Lee Kyung-min, researcher at Daesin Securities, diagnosed: "Now, when stocks have plunged due to fundamental concerns with low probability of realization, is actually an opportunity to increase positions. Particularly, KOSPI at the 7,300 level represents a forward P/E ratio of 6.3x, an extreme undervaluation zone at financial crisis levels, so if financial investment-centered supply flows in, it will lead the existing upward trend again." Daesin Securities analyzed that applying only a forward P/E of 9-10x could enable KOSPI to rise to between 10,000 and 11,500.
Analysts Warn of Volatility After August
Lee added: "Strong earnings momentum will be maintained through the third quarter, but inflation and interest rate upward pressure could materialize in earnest after late August. Afterwards, volatility expansion possibilities should be guarded against as profit momentum passes its peak and macro burdens increase."
FAQ
What caused KOSPI stocks to fall 5.35% on July 8?
KOSPI fell 409.52 points to 7246.79 due to peak-out concerns following Samsung Electronics' 90 trillion won quarterly profit announcement, leverage ETF supply distortions, and Middle East conflict reignition that chilled investor sentiment.
Why do securities firms call current KOSPI levels a buying opportunity?
Analysts assess KOSPI at 7,300 represents a forward P/E ratio of 6.3x, described as financial crisis-level undervaluation. Mirae Asset Securities' Seo Sang-young and Daesin Securities' Lee Kyung-min both characterized the decline as excessive adjustment due to supply shock rather than fundamental deterioration.
