Tracking South Korea ETFs tumbled sharply, with CSOP Hang Seng Korea Tech (03431) falling 4.75% to HK$8.53, TR Korea (02848) dropping 4.63% to HK$1,526, CSOP KOSPI (03121) declining 3.67% to HK$5.385, and Samsung Global Semiconductor (03132) shedding 3.01% to HK$59.3 as of press time.
On the news front, South Korean equities have been under sustained pressure recently, weighed down by a selloff in semiconductor giants amid wavering AI investment narratives, continued outflows from foreign and retail funds, and hawkish signals from the Bank of Korea that have suppressed valuations.
In response to the sharp decline in the Korean stock market, South Korean President Lee Jae-myung said the government is continuously studying policy measures needed to restore normal market functioning, and will receive a comprehensive report in the near term and take necessary action. However, Lee also stressed that direct government intervention in financial markets is not easy and is not an ideal policy choice.
Notably, following Samsung Electronics' completion of its share buyback program, SK Hynix announced it had completed a 40 trillion won share buyback one month ahead of schedule. JPMorgan estimates that of roughly $23 billion in buying in the Korean stock market last month, most came from buybacks by these two companies. As this source of demand gradually fades, the market lacks sufficient buyers to absorb foreign selling.
JPMorgan also noted that despite the sharp market drop, the scale of leveraged funds tracking Korean stocks remains very high, with limited capital withdrawals. Such funds often need to sell stocks passively on days of heavy declines, and before this pressure is digested, the market could face another wave of selling.
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