Korean stocks have crashed again! The 6500-point support level is in jeopardy.
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The South Korean stock market is under heavy pressure from a "post-holiday fall." Hit by a sharp global sell-off in semiconductor stocks during the Constitution Day holiday, the Korea Composite Stock Price Index (KOSPI) plunged more than 5% intra-day on July 20, hitting a low of 6,472 points, putting the key support level of 6,500 in jeopardy. The combined two-day drop has exceeded 10%, sharply increasing market attention on support levels below.
At market close, the KOSPI fell 4.46% from the previous trading day to 6,516.27 points, just one step away from the 6,500 mark. On that day, foreign and individual investors were net buyers of over 200 billion won, providing some support, but institutions were net sellers of 243.9 billion won; of this, financial investment institutions were net sellers of up to 295.6 billion won, constituting major selling pressure.
Holiday "gap" triggers post-fall, global semiconductor rout is the fuse
On the last trading day before the holiday (July 16), the KOSPI had already plummeted 6.37%. During the Constitution Day national holiday (July 17), while the domestic stock market was closed, the global semiconductor sector suffered a new wave of sell-offs.
The Philadelphia Semiconductor Index fell a cumulative 5.85% over July 16–17, with intra-day lows dropping as much as 9.71%. TSMC fell 7.29% in a single day on July 17, and Kioxia dropped even more with a 16.10% slump.
When the market opened on July 20, the KOSPI gapped down 2.60% to 6,643.58 points, then continued to fall. Market participants noted that Samsung Electronics and SK Hynix had already preemptively released some downward pressure in the previous session, and with valuations falling to historical lows, buying interest near 6,500 was relatively strong. Dip-buying sentiment, to some extent, limited further declines.
6,500 Points: The Key Node in the Bull-Bear Struggle
The significance of 6,500 points is that it is widely regarded in technical analysis as the next key support. Goldman Sachs had previously identified this level as the immediate support for KOSPI after losing hold of 6,800; any further drop would look to the 6,100 to 6,000 range.
Daishin Securities pointed out that the current KOSPI 12-month forward P/E is only 5.81, which is already at a historically low valuation. KOSPI is among the first global markets to enter a correction and thus possibly the first to bottom out.
At a media briefing that day, NH Investment & Securities noted, under current conditions, a proper "bottom" corresponds to a price-to-book ratio (PBR) of 1.3 to 1.4, which translates to about 6,000 points for the KOSPI index. Analysts also emphasized that it is "still too early" to call a peak in the semiconductor cycle.
Institutions: Sell-off driven by positions, no fundamental inflection point yet
Several analysts believe the core logic of this sharp decline is position-adjustment, rather than a substantial deterioration in semiconductor fundamentals.
Analysis suggests, the crux is that the market believes current profit levels for semiconductor companies are "unsustainable"—Micron's net profit increased 15-fold last quarter, Samsung Electronics' operating profit increased 17-fold year-on-year; such growth is objectively impossible to maintain. Semiconductor companies are shifting from price hikes to boosting volume at lower prices. The industry is "restarting the cycle at a high level"—once profitability is confirmed, valuations are expected to be repriced.
DS Investment Securities, meanwhile, is cautious regarding worries about oversupply. New capacity, including Samsung Electronics' Hunan fab, will not make substantial supply contributions before 2035; the DRAM market will continue to face severe undersupply in 2026 and 2027, and another supply gap is expected in 2031.
US Tech Giants' Earnings Season Begins—Potential Turning Point
The market is now focusing on the upcoming earnings season for large US technology companies as a key window to assess whether the semiconductor correction can end.
The AI-company earnings being released this week will test both the sustainability of AI demand and whether semiconductor stocks can escape deleveraging and valuation compression—making this the "watershed" for current market trends.
For Alphabet (reporting on the 23rd), focus will be on capital expenditure guidance for 2026–2027 and cloud business profitability; for Intel (reporting on the 24th), the market will look at whether server CPU shipments rebound.
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