KOSPI experienced extreme volatility during the first week of July (June 29-July 3), falling 3.84% to close at 8088.34 as AI infrastructure investment concerns triggered widespread selling. The decline was driven by news of Meta's cloud business entry and potential OpenAI IPO delays, which raised fears about weakening AI demand and memory chip consumption following Apple's product price increases. Korean semiconductor stocks led the market downturn, with circuit breakers activating twice during the week as the index briefly dropped below 7000 intraday before recovering above 8000.
KOSPI Falls 3.84% as Semiconductor Stocks Lead Market Decline
According to Korea Exchange on July 4, KOSPI closed the first week of July at 8088.34, down 322.87 points (3.84%) from the previous week. On July 2, a sell-side circuit breaker was triggered during trading as the index plunged over 7%, bringing the closing price below 8000 for the first time in 15 trading days. The following day, a buy-side circuit breaker activated as KOSPI surged over 6% and recovered above 8000.
DB HiTek recorded the steepest decline among KOSPI stocks (market cap above 1 trillion won, weekly trading value above 100 billion won), plummeting 23.75%. Market leaders Samsung Electronics and SK Hynix fell 8.84% and 9.71% respectively. Semiconductor material suppliers Huchems and Hanmi Semiconductor dropped 11.7% and 9.71%.
SK declined 15.34% during the period, reversing gains driven by subsidiary performance growth. Samsung C&T and Samsung Life Insurance, which hold Samsung Electronics stakes, plunged 12.34% and 11.45% respectively. SK Square shares fell 7.62%. Circuit board manufacturer Korea Circuit dropped 12.06%, ranking fourth in decline rate. Samhwa Condenser (-8.65%), Samsung Electro-Mechanics preferred shares (-10.55%), Daeduck Electronics (-2.70%), and Samsung Electro-Mechanics (-0.20%) also declined.
Han Ji-young, researcher at Kiwoom Securities, stated: "The KOSPI correction centered on semiconductor stocks has a strong technical pullback character following the record rally during the second quarter. Currently, as investment sentiment has cooled in a short period, the market can react more sensitively than usual to negative news."
Meta Cloud Business and OpenAI News Trigger AI Investment Concerns
Concerns about memory demand contraction following Apple's product price increases intensified alongside news of potential OpenAI IPO delays and Meta's cloud business entry, fueling fears of weakening AI investment. Meta's announcement that it would sell remaining computing resources from AI data centers to external companies particularly raised concerns that AI demand may be insufficient.
Semiconductor stocks, circuit board stocks, secondary battery stocks, and holding companies related to Samsung Electronics and SK Hynix—previously considered AI beneficiaries—all slid simultaneously.
Gaon Cable Surges 51.79% on Data Center Project Wins
Among AI-related stocks, those with momentum events avoided the AI concern tsunami. Gaon Cable surged 51.79%, recording the highest gain. The LS Group affiliate, which produces power cables including ultra-high voltage, distribution, and transmission lines, as well as communication cables, soared on news that its US subsidiary LSCUS recently won consecutive AI data center projects from global big tech companies including Google, Meta, and Amazon.
Semiconductor equipment supplier KC Tech rose 31.32% on expectations for the "three mega projects." Seo Seung-yeon, researcher at DB Securities, analyzed: "Samsung Electronics and SK Hynix's aggressive process conversion and new CAPA (production facility) investments are leading to increased semiconductor equipment orders for KC Tech."
Construction stocks also rose on news of semiconductor facility expansion following the three mega projects. GS E&C surged 22.53%, while Samsung E&A and Hyundai Engineering & Construction gained 16.04% and 11.62% respectively.
Cosmetics Stocks Rally as First-Half Exports Hit Record $7 Billion
As semiconductor stocks paused, cosmetics stocks jumped. Korea Colmar and Amorepacific surged 29.88% and 24.95% respectively. First-half cosmetics export value reached $7 billion (approximately 11 trillion won), recording an all-time high. The fact that stock prices were low compared to earnings growth also stimulated investment sentiment in cosmetics stocks.
Hyung Kwon-hoon, researcher at SK Securities, commented: "Due to supply concentration in the tech sector, cosmetics sector stock prices showed extreme weakness since May, but export momentum remained consistently strong during this period. While it's impossible to predict how long the rotation will continue, at least for investors betting on rotation, the cosmetics sector is an attractive option."
FAQ
What caused KOSPI to fall during the first week of July?
KOSPI fell 3.84% to 8088.34 during the first week of July (June 29-July 3) due to AI infrastructure investment concerns triggered by Meta's cloud business entry announcement and potential OpenAI IPO delays, combined with worries about memory demand contraction following Apple's product price increases.
Which Korean stocks gained the most during the KOSPI decline?
Gaon Cable recorded the highest gain at 51.79% after its US subsidiary LSCUS won AI data center projects from Google, Meta, and Amazon. Korea Colmar and Amorepacific surged 29.88% and 24.95% respectively as first-half cosmetics exports reached a record $7 billion.
