15 Days After World Cup Elimination, South Korea's National Fate Stock Crashed
TechFlow Selected TechFlow Selected
15 Days After World Cup Elimination, South Korea's National Fate Stock Crashed
The real national team of Koreans this summer collapsed faster than the football team.
Navigating Web3 tides with focused insightsBy: Xiao Bing
June 25 might be the most memorable day for Koreans in 2026.
That night, at Monterrey Stadium, the Korean team only needed a draw against South Africa to advance, but lost 0-1. Son Heung-min came off the bench, touching the ball 29 times throughout the match.
Three days later, DR Congo scored three consecutive goals to reverse the match against Uzbekistan. The Korean team, having waited agonizingly for 71 hours, was squeezed out of the Round of 32, ending their 12th World Cup journey in history in a nearly humiliating manner.
Also on June 25, SK Hynix's stock price surged to a historical high. The national pride taken away by football was returned double by memory chips. No one expected that this day was both the endpoint of Korean football and the peak of SK's stock price curve.
Today, 18 trading days later, at 9:35 AM on July 13, the Korea Exchange triggered the circuit breaker mechanism. The KOSPI intraday drop expanded to 6%, SK Hynix plummeted 12% at one point, breaking below the 2 million Korean won threshold, hitting a new low since June 11, and retracing 33% from the historical high on June 25.
The 2x Long Hynix ETF in the Hong Kong stock market fell over 22% in a single day.
Korea's true national team this summer collapsed even faster than the football team.
From Coronation to Loss, It Took Only Three Weeks
To understand the intensity of this decline, one must first understand the frenzy of the prior rise.
In the past 12 months, SK Hynix's stock listed in Seoul rose about 850%, with market capitalization breaking through 1 trillion USD.
On June 22, it set a historical closing record, with market cap once surpassing Samsung Electronics, ending the latter's decades-long reign as the king of Korean market cap. Holding over 56% of the global HBM market share, exclusively supplying about 70% of HBM orders for NVIDIA's new generation AI servers, with long-term agreements scheduled until 2028, and Q1 operating profit margin at 72%, higher than NVIDIA.
The capital market could not find a purer AI memory target than it, and Korea could not find a national calling card it was more proud of than it.
A self-account (joke) from a young person in Seoul circulated on Zhihu, roughly meaning: This is the best summer since she became an adult, she found a job this year, invested all her salary into the stock market, earned five years' worth of salary, and walking on the streets of Seoul, she had an illusion of a golden age for humanity.
The illusion of the golden age lasted less than a month.
News of Meta's plan to sell AI computing power externally came in early July. The buyers' interpretation was simple and rough: a hyperscale vendor starting to sell "excess computing power" indicates the market might have built too much. Morgan Stanley's Chief US Equity Strategist subsequently recommended reducing semiconductor holdings. The PHLX Semiconductor Sector Index has fallen cumulatively over 13% since July. On the first trading day the news transmitted to Seoul, KOSPI plummeted nearly 8%, SK Hynix fell over 12% in a single day, and market cap evaporated by over ten billion USD in one day.
In the following two weeks, this market entered a state of madness:
On July 3, a deep V rebound occurred, KOSPI rose over 5%, rising enough to trigger the circuit breaker, and programmatic buying was suspended;
On July 7 and 8, it fell to circuit breaker limits for two consecutive days. The close on July 8 retraced over 20% from the high on June 19, officially falling into a technical bear market.
SK Hynix has already had over 50 trading days this year with single-day price changes exceeding 5%; last year the full-year number was 37.
Circuit breakers triggered on both rises and falls. The number of times the sidecar mechanism and circuit breakers were triggered in the Korean stock market in the first half of this year have both broken historical records from the 2008 financial crisis year.
The day that best illustrates the problem is July 7.
Samsung Electronics released its Q2 earnings forecast that day, with operating profit of 89.4 trillion Korean won, a year-on-year surge of 1810%, exceeding market estimates, and even exceeding its full-year profit for 2025.
The strongest single-quarter report card in history was exchanged for a heavy stock price plunge and a broad market circuit breaker.
When a stock's price has long priced in far beyond the current income statement, no matter how beautiful the earnings report is, it is answering the previous exam paper. The new exam paper in the market's hands writes different questions: Is AI infrastructure overheating? Can the huge capital expenditures of chip factories still be recovered?
Nasdaq's Champagne, Seoul's Bill
In the same week the Seoul market fell into a bear market, SK Hynix accomplished a major event in New York that will be recorded in the history of the capital market.
On July 10, SK Hynix ADR listed on Nasdaq, with an issue price of 149 USD, raising 26.5 billion USD, surpassing Alibaba's 2014 record, becoming the largest IPO scale for a foreign enterprise listing in the US, and the second largest stock issuance in US history only behind SpaceX last month.
Subscription exceeded 7 times, with over 500 institutions participating. On the first day of listing, it opened at 170 USD, touched a high of 177 USD during trading, and closed at 168.01 USD, surging nearly 13% on the first day. Based on the closing price, the market cap was about 1.22 trillion USD, surpassing Micron in one move and taking the top seat in global memory chip market cap. At the bell-ringing ceremony, CEO Kwak Noh-jeong stated that the global memory industry is heading towards the most severe supply shortage in history by 2027; Chey Tae-won said future demand will grow exponentially.
Popping champagne in New York, sending the bill back to Seoul.
This victory had been bleeding the local market since the day preparations began. The issuance benchmark price was originally set at the closing price of June 23, 2.555 million Korean won, but the stock price went lower all the way, forcing the benchmark down to 2.425 million on July 3, and the fundraising scale shrank by about 1 billion USD. Every negative candle during the pricing window was discounting the Nasdaq pricing order.
17.79 million new ordinary shares are real dilution; the new shares will list and circulate in Seoul on July 29.
According to Reuters, the company plans to convert and transfer over 20 billion USD of fundraising back to Korea around July 15. The hundreds of billions of USD-level currency exchange demand will smash into the foreign exchange market which has already fallen to 1528 Korean won per 1 USD. Due to restrictions on converting Korean ordinary shares to ADRs, US ADRs currently carry a premium of about 17% over Seoul stock prices. This inverted spread is like a mirror, reflecting the completely different treatment of the same asset in two markets: global funds are rushing to pay a premium for scarcity in New York, while Seoul holders are paying for liquidity drainage and leverage clearance.
The last match that ignited the sell-off this morning came from an earnings outlook by local Korean brokerage KIS.
The report estimated SK Hynix Q2 operating profit at 60.4 trillion Korean won, a year-on-year surge of 556%, but about 8% lower than the market consensus expectation of 65 trillion. The reason lies in the pricing structure: HBM prices are locked by long-term supply agreements, and contract prices do not adjust with market conditions in the short term. When the average spot price of ordinary DRAM rose about 30% quarter-on-quarter in Q2 and NAND rose about 50%, Hynix, with the highest HBM proportion, was instead the one that ate the least bonus in this round of price increases. Its biggest moat became a drag on average prices this quarter.
Growth of 556%, fell 12%. At high stock prices, not being good enough is more fatal than being bad. What the market wants has always been better than imagined.
Ants, Leverage, and an Out-of-Control Amplifier
Why did the same AI correction become a chain of circuit breakers in Korea? To answer this question, one must look at the skeleton of this market.
KOSPI has over 800 constituent stocks, Samsung Electronics plus SK Hynix account for over 43% of the index weight.
In May this year, Korea allowed single-stock leveraged ETFs. Since then, these two stocks and their derivatives once occupied 84% of the trading volume in the Korean stock market.
The CSOP 2x Long Hynix ETF once broke through 16 billion USD in asset size, with year-to-date gains once exceeding 1000%, making it the largest similar product globally. Some institutions estimate that for every 1% market fluctuation, Korean related leveraged ETFs will generate about 9 billion USD of mechanical rebalancing demand. Such products rebalance daily; when falling, they must sell more holdings. The more it falls, the harder they sell. Around July 2, forced liquidation transactions of leveraged products linked to Hynix once accounted for the bulk of the underlying stock's daily trading volume.
In the past month, over 90% of Hynix leveraged ETF investors are in a loss state.
The other end of the leverage is retail investors.
As of the end of May, Korea's credit financing balance broke through 38 trillion Korean won, hitting a historical high. Since the beginning of this year, foreign capital has net flowed out of Korean stocks by about 95 billion USD, net selling for 13 consecutive trading days since the peak on June 19, selling 3.73 trillion Korean won in a single day on July 7; during the same period, Korean retail investors calling themselves "ants" net bought about 80 billion USD, accepting almost all sell orders one-to-one.
Institutions retreated in an orderly manner at the top, while retail investors added leverage to build positions against the trend, betting on national industries as faith. When rising, national destiny and leverage reinforced each other; when falling, the two trampled on each other, with no buffer in between.
However, the bulls' cards are actually still on the table.
KIS maintained an overweight rating in the same report, with a target price of 3.8 million Korean won, reasoning that after the industry shifts to a 3 to 5-year long-term agreement structure, the anchor of valuation will change from single-quarter average price increases to how long high profitability can last; Kwak Noh-jeong is betting that the shortage will continue until after 2030.
The bears look at another set of logic: The total investment of Samsung and SK Hynix in the next ten years is expected to exceed 1000 trillion Korean won, the Korean government will build four more chip factories, Micron is expanding production simultaneously, the oligarchs are personally dismantling the supply discipline that supports this round of super profits, and the low P/E ratio of cyclical stocks has historically most often appeared at the top of earnings.
The divergence is not in the life or death of the company, but in the cycle coordinates. Whether the 7200-point KOSPI and Hynix that has fallen by one-third is a deep breath in a super cycle or the last look back from the edge of the rooftop depends on how long the engine of AI capital expenditure can still roar.
Koreans accepted the World Cup elimination in three days.
The national destiny stocks did not give them this chance. The day after tomorrow, over 20 billion USD will start currency exchange and transit; at the end of the month, 17.79 million new shares will list in Seoul. Can the ants who have already smashed in 80 billion USD this year catch the next baton?
Join TechFlow official community to stay tuned
Telegram:https://t.me/TechFlowDaily
X (Twitter):https://x.com/TechFlowPost
X (Twitter) EN:https://x.com/BlockFlow_News
深潮TechFlow
