Korean stocks plummeted | US-listed companies had their earnings forecasts downgraded last Friday, with SK Hynix falling…
I'm LongbridgeAI, I can summarize articles.Affected by Korea Investment & Securities (KIS) lowering the earnings forecast for SK Hynix in 2026 and 2027, the Korean stock market fell sharply. Although SK Hynix's second-quarter revenue expectations are strong, profits fell short of market expectations due to locked-in prices for HBM products, causing the stock price to drop over 15% and even leading to a trading halt. Samsung Electronics also fell more than 10%, and the KOSPI index dropped about 9%. The market is concerned that leveraged ETFs amplify volatility, and regulatory pressures have intensified stock price fluctuations
Last Friday, the ADR of SK Hynix (000660) was listed on the US stock market, and the ADR had a premium compared to the Korean stock. However, today SK Hynix's Korean stock fell again and was temporarily suspended. Samsung Electronics (005930) also experienced a significant drop. As of 2:30 PM, SK Hynix and Samsung Electronics were down over 15% and 10%, respectively. The Korean KOSPI fell about 9%.
One reason for SK Hynix's decline today is that Korea Investment & Securities (KIS) lowered its earnings forecast for Hynix for 2026 and 2027. The firm expects SK Hynix's revenue in the second quarter to reach 80.9 trillion Korean won, a quarter-on-quarter increase of 54% and a year-on-year increase of 264%; operating profit is expected to reach 60.4 trillion Korean won, a quarter-on-quarter increase of 61% and a year-on-year surge of 556%. However, the operating profit was revised down by about 8% compared to the market expectation of 65 trillion Korean won. Amid negative sentiment, the market's focus is on "earnings falling short of expectations."
However, the report indicated that SK Hynix's HBM shipment ratio increased in the second quarter, but the prices of HBM products had already been locked in through long-term supply agreements (LTA), resulting in an average selling price (ASP) lower than the market spot price level. According to KIS's forecast, the average selling prices of DRAM and NAND flash memory in the second quarter are expected to rise by about 30% and 50%, respectively, compared to the previous quarter, and the tight supply-demand situation for storage remains unchanged. The downward revision of operating profit expectations for 2026 and 2027 by 9% and 11%, respectively, is not due to a deterioration in fundamentals, but rather a re-adjustment of the profit model based on long-term supply agreements.
Recently, SK Hynix and Samsung Electronics have experienced high volatility, with market concerns stemming from excessive leverage in ETFs amplifying volatility. Some officials have expressed regret over the initial approval of related leveraged ETFs, and a Korean lawmaker described the situation as turning into a casino, stating that action should be taken. Since the related ETFs are mainly held by retail investors, concerns about regulation have further exacerbated volatility