Samsung, SK hynix market caps plummet W117tr amid semiconductor uncertainty

Concerns surrounding the semiconductor industry have led to a nearly 120 trillion won ($90 billion) decline in the market capitalization of South Korea's two leading makers of memory chips, Samsung Electronics and SK hynix, over the past month, according to data released on Sunday.

According to the Korea Exchange, the country's sole bourse operator, the two companies’ market value has shrunk by a total of 117.18 trillion won despite market watchers’ evaluations that the decline has been excessive.

Samsung’s market capitalization decreased from 467.43 trillion won on Aug. 21 to 376.10 trillion won on Friday, while SK saw a reduction from 140.21 trillion won to 114.37 trillion won, over the same period.

Their stock prices fell by 20.15 percent and 21.33 percent, respectively, over the past month.

Market bellwether Samsung’s shares of the main Kospi market capitalization fell from 21.14 percent to 17.78 percent, the lowest level since Sept. 22, 2022, when it reached 17.67 percent. SK’s shares also dropped to 5.41 percent, down from 6.34 percent a month ago, a significant decrease compared to the 7.57 percent recorded on June 18.

As foreign investors' sell-offs intensified, Samsung's foreign ownership ratio dropped to 54.66 percent, the lowest since March 20, and SK’s fell to 53.25 percent, the lowest since February 7.

The pessimistic outlook worsened as foreign securities firm Morgan Stanley raised concerns about a potential peak-out and issued a “half-price” target for SK, further damaging investor sentiment in domestic chip stocks.

On Thursday, Samsung and SK plunged by 2.02 percent and 6.14 percent, respectively. Samsung’s shares lost another 0.16 percent on Friday, while SK added 2.81 percent.

While market experts agree that the decline is excessive, they believe it will be difficult to reverse the downward trend in the short term.

“SK hynix has fallen by around 40 percent since its peak in July, reflecting concerns over extreme oversupply, which has a limited likelihood of materializing,” said Hwang Min-seong, an analyst at Samsung Securities.

Kim Young-gun, a researcher at Mirae Asset Securities, also said, "The recent stock price decline is more the result of rapid profit-taking driven by inertia rather than significant changes in the industry."

However, Hwang also noted that when market concerns over economic recession and oversupply dominate, the market tends to overshoot downward, making it difficult to gauge the appropriate stock price level.

He predicted that SK's stock price could rise again after November, once the current uncertainties such as the US presidential election and post-rate cut economic conditions are resolved.