SEOUL — After-hours trading remained active on Wednesday following a turbulent regular session that saw the KOSPI index fall 6%, compounding an 11% drop from the previous day. Over the two sessions, the index has lost approximately 16% of its value, erasing about $2.18 trillion in market capitalization from Seoul's stock market.
The sell-off was triggered by disappointing preliminary results from SK Hynix (KRX:000660), which reported second-quarter revenue of 79.3 trillion won and operating profit of 60.5 trillion won. Both figures missed consensus estimates by 5.6% and 5.4%, respectively. The company's shares tumbled 9.6% on the news.
While the earnings miss was modest, the market reaction was severe, suggesting deeper concerns among investors. Samsung Electronics (KRX:005930) fell 5.2%, and Taiwan Semiconductor Manufacturing (TPE:2330) declined 3.5%, reflecting pressure on the broader chip sector.
Investor focus has shifted from the strong year-over-year growth — revenue up 257% and operating profit up 557% — to the quality of earnings. SK Hynix reported net income of 93.9 trillion won, but 63.3 trillion won (67%) came from investment returns, raising questions about recurring cash flow. The company ended the quarter with net cash of 69.4 trillion won but did not provide specifics on its shareholder-return program.
“Strong is no longer enough,” said Gary Tan, portfolio manager at Allspring Global Investments. “Investors had been looking for more obvious triggers related to contracts and capital returns.”
SK Hynix President Song Hyun-jong noted that underlying demand remains solid, with major customers requesting more memory supply. The company has secured long-term supply agreements with about 10 clients and began large-scale deliveries of HBM4 in the quarter. However, revenue recognition for some shipments was delayed due to slower delivery rates.
Peter Kim of KB Securities described the sell-off as “a liquidity and sentiment-driven event,” highlighting that mandatory sell-offs and limited market liquidity amplified existing fears about AI funding and competition from China. The KOSPI is up 41.5% year-to-date in dollar terms but remains nearly 40% below its record high.
Looking ahead, Samsung Electronics is scheduled to report earnings on Thursday, which will be a key test for the market. Investors are also awaiting Seoul's evaluation of market-stabilization measures and further details from SK Hynix on its shareholder-return commitments. Risks include additional margin calls, a slowdown in AI infrastructure investment, or accelerated competition from Chinese chipmakers.
