South Korean chip stocks tumble again, Samsung and SK hynix plunge over 7%

Price Action
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Summary · why it matters

Emerging market equities fell for the first time in three sessions, pressured by a sell-off in South Korean semiconductor stocks as investors locked in profits after Friday's record surge. The MSCI Emerging Markets Index dropped 1.1 percent, having soared as much as 6.6 percent on Friday. Samsung Electronics and SK hynix both slumped more than 7 percent, dragging South Korea's KOSPI index down 5 percent. Julia Wang, chief investment officer for North Asia at Nomura International Wealth Management, said the current volatility in tech stocks is largely driven by high levels of leverage among investors. While valuations may be broadly in line with fundamentals, the leverage-driven market structure means volatility is likely to remain elevated, with South Korea a clear example. In currency markets, most emerging market currencies strengthened against the dollar after oil prices fell on news that President Donald Trump said the US and Iran would resume talks on Monday, easing Middle East tensions. The South Korean won led gains among regional emerging market currencies, supported by a stronger yen amid speculation that Japan and the US may jointly intervene further to prop up the yen. The Malaysian ringgit weakened after Prime Minister Anwar Ibrahim's coalition lost a state election to the former ruling party Barisan Nasional, raising investor concerns about political stability ahead of the next general election. Goldman Sachs analysts said the result could put more focus on coalition dynamics and increase the likelihood of early elections, keeping political risk a near-term drag on the ringgit. However, Goldman Sachs remains positive on the ringgit over the longer term, citing Malaysia's strong fundamentals, including foreign direct investment inflows and the country's role in the global tech supply chain, which should continue to support the currency.

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