Korea's credit dries up, SK Hynix evaporates $89 billion—but A-shares made two counter-votes in the same panic.

On Monday, July 13, a tightening transmission chain originating from Korean banks resonated with structural portfolio reallocation pressure following SK Hynix's US listing, causing the seventh circuit breaker of the KOSPI this year to hit the Asia-Pacific technology sector hard.

SK Hynix, listed in Korea, saw its stock price plunge a record 15.4% in one day, with its market value evaporating by over $89 billion. Samsung Electronics fell nearly 11%, and the KOSPI closed down 8.9%. The shock quickly reflected in the A-shares market: the STAR Market 50 index gave back gains from the highs, and memory chip stocks suffered mass limit-downs.

But on the other end of Asia-Pacific tech stock panic, leading domestic GPU maker Muxi Co. saw its share price surge more than 13% intraday to a new historic high, with market cap breaking through 400 billion RMB, while the A-share banking sector, backed by 645.6 billion RMB annual dividends, rallied against the trend.

These performances indicate that the market is not engaging in "indiscriminate selling," but is using real money for a refined repricing: distinguishing between supply-side noise and real demand signals in the AI cycle, and between liquidity-driven valuation bubbles and growth logic supported by industry trends.

A transmission chain starting from the bank counter

The current round of deleveraging risk in Korea did not erupt suddenly on July 13, but the severity on this day exposed the seriousness of the problem.

According to Korean media reports on July 12, Korea’s five major commercial banks have used up over 85% of the annual household loan growth quota in the first half of the year, with two banks exceeding regulatory lending limits. New credit space is virtually exhausted for the second half, and the market broadly predicts an imminent "cliff-style contraction" of credit. A brokerage’s overseas research team survey showed that available funds for retail investors in the Korean market have dropped about 20%, and the pace of funds moving from banks to brokers has completely stalled.

Huabao Fund pointed out the direct catalyst is SK Hynix’s US listing: institutions are shifting their holdings from domestic Korean stocks to US ADRs, leading to structural one-way portfolio switches—selling Korean stocks, increasing US ADR holdings. The Korean Financial Supervisory Service has required asset management companies to submit volatility suppression and remedial plans for single-stock leveraged ETFs. The “F4” high-level coordination mechanism, made up of the Ministry of Economy and Finance, Financial Services Commission, Bank of Korea, and Financial Supervisory Service, has intervened. Financial Supervisory Service chief Lee Chan-jin publicly stated “regret for not doing everything possible to prevent” the product launch.

Three causes for SK Hynix’s plunge, none due to demand collapse

The core reason for SK Hynix’s record plunge is not weakening AI memory demand, which is key in judging whether this wave of shocks is sustainable.

According to Photon Capital’s analysis, SK Hynix’s collapse on Monday was driven by three supply-side factors: profit-taking (following a nearly 13% surge of its US ADR on debut), new share supply (the $26.5 billion US IPO dilution effect), and repricing between Korean shares and US ADRs. Investor portfolio rebalancing between Korean and Taiwanese AI hardware stocks further intensified selling pressure.

Analysts broadly believe this pullback is temporary. Photon Capital noted: “Structural AI memory demand continues to exceed supply. The broader trend of rising memory prices, increasing demand, and supply tightness has not disappeared overnight.”

Korea Investment & Securities forecasts SK Hynix’s Q2 operating profit may be 8% below market expectations, as its high HBM revenue share limits the rise in average selling price compared to peers—but this is a revision of earnings expectations, not a demand collapse.

Even more indicative was SK Hynix CEO Kwak Noh-jung’s public statement on the company’s Nasdaq IPO day last Friday: the global memory industry is heading into the most severe supply shortage ever, with the peak expected in 2027 and shortages possibly extending beyond 2030. Micron CEO Sanjay Mehrotra previously gave a consistent judgment.

Same day, two directions: Muxi hits new high vs. memory chips limit down

The A-share tech sector isn’t being sold indiscriminately—the internal fractures in the sector are more telling than the overall decline.

Memory chips bore the brunt: Shannon Chip hit a 20cm limit-down, GigaDevice and Deking Technology were limit-down and locked, Biwin Storage and others fell over 10%. Fiber optics, MLCCs, PCBs and other AI hardware tracks also saw concentrated profit-taking. But on the other hand, Muxi’s share surged over 13% intraday, reaching 1033 RMB, closing up nearly 7%, with a market cap breaking through 400 billion RMB.

Muxi’s strength is backed by two independent logics: first, its “Xi Jing” S-series super-node product is set for world premiere at the 2026 World Artificial Intelligence Conference (WAIC); second, domestic autonomous GPUs benefit from a boom in inference-side demand and restricted supply of overseas high-end chips, opening a window for large-scale replacement. Donghai Securities data shows that domestic AI accelerator card market share rose from 30% in 2024 to 41% in 2025, and the domestic AI accelerator chip market size is expected to grow 59% year-on-year to 381.4 billion RMB in 2026.

Jinxin Fund points out that tech stock corrections are mostly trading cool-downs, not an industry logic reversal: “AI computing-power demand still grows, and domestic computing, memory, semiconductor equipment and materials are still in an industrial upgrade and domestic substitution trend.”

Chuangjin Hexin Fund’s chief economist Wei Fengchun believes this round’s core is AI industry dividend-driven risk appetite rising in a targeted manner, “Moderate corrections help the trend be more stable.”

Safety margin marked by 645.6 billion in dividends

Amid volatility in the tech sector, funds did not exit the market—they reallocated on a large scale.

Suzhou Bank rose 6.15% to lead city commercial banks, China Construction Bank up 3.56%, Bank of Communications and Industrial and Commercial Bank of China also strengthened. Wind data shows 41 banks' 2025 combined dividend exceeds 645.6 billion RMB, a record high, with nearly 345.9 billion being newly distributed recently. Dividend Low Volatility Index, for example, now offers a 5.2% dividend yield over the past 12 months, while only 1.23% of all-A trading volume came from this sector in the past week, a far healthier trading structure than the tech sector.

Huatai-PB Fund data shows dividend ETFs had net inflows of 9.8 billion RMB in May and 9.2 billion RMB in June, showing continued medium- and long-term fund allocation. Wanjia Fund adds that coal stocks, with both high dividends and tight supply-demand, are defensive and aggressive at this point.

China Europe Fund concludes this adjustment is not a complete mid-term thematic switch—the market needs time to regroup, and tech stocks may resume outperforming consumption and domestic demand after emotion and holdings rotate. After the adjustment, the market will return to a comparison of performance realization, order growth, and valuation cost-effectiveness. The 645.6 billion RMB dividend and Muxi's new high already marked, in advance, the coordinates for this calculation from two directions.

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