SK Hynix’s stock price plummeted more than 20% in two days, and AI trading showed signs of ebbing
SK Hynix continued its violent decline in Seoul on Tuesday, with a drop of more than 20% in two days; global AI hardware stocks suffered a sell-off, exacerbating the market's doubts that this year's astonishing rise in chip stocks "rose too fast and went too far." The South Korean chip giant fell as much as 9% on the South Korean exchange on Tuesday, following a record 15% plunge on Monday. South Korea's benchmark Kospi index fell 5.3% at one point. Share price of peer Samsung Electronics fluctuated. The latest wave of declines comes as investors continue to sell off global technology hardware stocks, as the market becomes increasingly concerned about overcapacity in the AI field. For SK Hynix, whose stock price performance ranks among the best in the world this year, the violent fluctuations in its stock price have also highlighted the unusually large scale of leveraged bets related to it. Listing the company's ADRs in the U.S. could amplify share price swings as trading sentiments in Seoul and Wall Street interact. Jongmin Shim, an analyst at CLSA Securities Korea, said that South Korea has become a benchmark for the AI boom. In the past, traders typically looked at the Philadelphia Semiconductor Index or Index, and then estimate the trend of Korean stocks; now the situation is just the opposite. The influence of the Korean market continues to increase. South Korean retail investors broke from their recent bargain-hunting pattern and sold more than 2.5 trillion won ($1.7 billion) of Kospi constituents on Tuesday, with foreign investors on the buy side. Volatility has swept across the Kospi index and its two largest weight stocks, SK Hynix and Samsung Electronics, which together account for more than half of the index's weight. According to compiled data, SK Hynix has had more than 50 trading days this year, with its stock price fluctuating up or down by at least 5% in a single day. As the July 23 earnings release date approaches, the stock price may fluctuate further. Monday's selling pressure was partly due to a report from a local brokerage that SK Hynix's operating profit may be lower than consensus estimates. According to data from the Korea Financial Investment Association, the forced liquidation rate caused by buying stocks with short-term financing rose above 10% last week, much higher than the average of 2.1% over the past six months.