Summary
Samsung Electronics and SK Hynix both posted losses approaching 50%, but the real cause of the decline lay not in the semiconductor industry but within the market's own structure. Yoon Je-min, CEO of Integral Investment Advisory, points to a chain of selling created by short-gamma hedging in leveraged and inverse products. The point at which this selling pressure finally winds down is precisely what will serve as the real rebound trigger for both stocks.
How It Unfolded
During the recent sharp drop in the KOSPI, Samsung Electronics and SK Hynix — despite being top-tier stocks by market capitalization — suffered losses far more severe than would be expected. A decline of this magnitude would normally be accompanied by fundamental negative catalysts such as downward revisions to earnings outlooks or order cancellations, yet no notable changes were reported in HBM order backlogs or foundry utilization rates. Meanwhile, the market has offered the opposite explanation: a mechanical structure in which the decline itself triggers further declines.
Brokerage derivatives desks that run leveraged and inverse ETNs and ETFs must sell additional shares in the same direction as the index whenever the underlying index drops sharply, in order to match their gamma exposure. The further the index falls, the larger the resulting sell volume becomes, and that selling in turn drags the index down further — a self-reinforcing loop. In other words, losses can be amplified purely by derivatives-hedging supply-demand (order flow), independent of individual stocks' valuations or earnings.
The fallout spread to KOSDAQ as well. Newly listed IPOs took a direct hit from the demand forecast stage amid the heightened volatility, and offering prices were repeatedly adjusted down to the lower end of their ranges. As risk appetite across the market froze, a period set in where index-wide volatility — rather than any individual company's growth story — was what determined prices.
The Structural Backdrop
This explanation matters because it draws a line between what the market has already priced in and what it has not. A fundamental risk such as an earnings downturn is a risk that doesn't need to be priced in here, since it hasn't actually occurred. The unwound position in leveraged products — that is, sell volume that has yet to be unwound — remains a risk that is still outstanding. If a substantial portion of the decline stemmed from the latter, then once the liquidation is complete, there is room for share prices to revert to their original valuations.
Stock and Sector Impact
- Samsung Electronics, SK Hynix: If the decline widened purely from hedge-related liquidation while HBM orders and foundry utilization rates remained unchanged, the rebound could be substantial once the hedge unwinding is complete.
- Brokerages issuing leveraged/inverse ETNs: Gamma-hedging trades are driving up both trading value and profit-and-loss volatility at derivatives desks.
- Companies planning KOSDAQ IPOs: Weak demand forecasts and offering prices set at the low end are adding to the burden of absorbing float in early trading.
- Semiconductor materials, parts, and equipment stocks: If these were swept up in the index-wide decline unrelated to their earnings fundamentals, they stand to benefit from a rebound from a bargain-hunting perspective.
- KOSDAQ stocks with high margin trading and short-term credit balances: These remain exposed to a channel where a sharp index decline triggers forced liquidations, further amplifying the drop.
Bull vs. Bear Scenarios
The bullish scenario rests on the view that the hedge-related selling from leveraged products has largely run its course. If the source of the selling pressure was derivatives-related supply-demand (order flow), then once that flow dries up, Samsung Electronics and SK Hynix could see a stronger rebound as they revert to their original fundamentals of earnings and order backlogs.
The bearish scenario starts from the fact that the diagnosis of "liquidation complete" has not yet been confirmed. Until balance data for leveraged and inverse products is publicly tracked, the possibility of renewed volatility cannot be ruled out, and if KOSDAQ margin trading balances remain elevated, further declines from forced liquidations remain a possibility.
Investor Action Points
- Check trends in KOSDAQ margin trading balances and unsettled brokerage receivables to assess whether forced-liquidation pressure remains.
- Track changes in net asset value and trading value of leveraged/inverse ETNs and ETFs to gauge when hedge-related liquidation is nearing completion.
- Compare against Samsung Electronics' and SK Hynix's upcoming earnings releases and HBM-related order disclosures to verify whether there has been an actual change in fundamentals.
- Reassess the valuation appeal of new KOSDAQ IPOs through their finalized offering prices and demand forecast subscription ratios.
Samsung Electronics: Real-Time Data
Samsung Electronics's most recent closing price was 262,500 won (+26.81% versus the previous day), and the signal combining foreign investor/institutional investor supply-demand (order flow) with news and momentum reads 🟢 Buy-leaning. Foreign investors, institutional investors, news, and momentum are all positive, making this one worth watching.
- ▲ Dual buying — foreign investors +2,099.9 billion won · institutional investors +935.0 billion won in combined buying
- ▲ News flow — 15 positive catalysts vs. 7 negative catalysts — positive catalysts prevail
Recent related news skews favorable, with 15 positive catalysts versus 7 negative catalysts.
※ Price and foreign/institutional investor supply-demand (order flow) data are provided by Korea Investment & Securities (KIS) as of the time of publication.
This article is auto-summarized and analyzed content based on the original news source. View original (Maeil Business Newspaper)
