Volatility Deepens Ahead of Samsung's Earnings, as Shipbuilding, Chip and Policy Events Pile Up This Week

Kospi Whipsaws a Day Before Samsung's Earnings

Kospi dropped about 2.2% to the 7,900 range, while Kosdaq extended losses to near 4%, slipping into the 830s. Foreign investors sold across cash, futures, and both call and put options — about 1 trillion won in Kospi cash and another 1 trillion won in futures — while institutions also net sold. Only pension funds bought a small amount, and it remains to be seen whether that continues.

The won-dollar rate, which had dropped more than 30 won on Friday, reversed higher again to around 1,433 won. Even with Samsung's preliminary earnings due the next morning, the market found little comfort: Kospi rose 2.9% intraday before falling more than 3%, a roughly six-percentage-point swing in a single session.

Kospi's daily trading range has averaged more than four percentage points since May and June, an unusually wide swing by historical standards. Analysts attribute much of the amplification to derivative structures such as single-stock leveraged ETFs, and see a decline in volatility as the key signal for the market's next leg higher.

Samsung Earnings Surprise Expected as SK Hynix Enters ADR Pricing Window

Samsung Electronics is due to release preliminary results around 7:30 a.m. tomorrow, with the market consensus at roughly 85 trillion won in operating profit, though estimates range from the low 80 trillion to 90 trillion won. Meritz Securities analyst Kim Sun-woo, ranked the top semiconductor analyst, estimates the chip division's pre-provision profit at around 110 trillion won and expects total operating profit to still exceed 90 trillion won even after roughly 19 trillion won in incentive-related provisions are booked — nearly double the prior quarter's roughly 57 trillion won. Coming out just a day before the release from a highly regarded analyst, the forecast is seen as unusually credible.

With expectations already elevated, some now argue the results could still surprise to the upside; Samsung shares turned modestly higher to reclaim the 310,000-won level. SK Hynix, meanwhile, has entered its Nasdaq ADR pricing window, with the offer price to be set as the volume-weighted average closing price over three to five trading days before subscription — meaning this week's domestic share price will effectively determine the U.S. offering price. SK Hynix shares fell about 4% Monday, dipping near the 2.3-million-won level.

Canada Submarine Decision Looms, Lifting Shipbuilders and Defense Stocks

Reports indicate Canada's roughly 60-trillion-won, 12-vessel submarine program may name a winner around 5 a.m. Korea time on July 7, with talk of a possible split order shared with Germany. Hanwha Ocean surged more than 10% intraday before paring gains, still closing up about 4%.

The project is seen as a test of whether Korea can break into NATO-member defense procurement long dominated by European shipbuilders. A shipbuilding industry expert noted that Canada's fast-moving order could also pull forward submarine procurement timelines in other countries awaiting decisions, including Saudi Arabia, Greece, Morocco, Peru, Egypt, the Philippines, and Indonesia.

In semiconductors, SK Hynix's large capital raise is drawing attention as a signal that it is securing funding to get ahead of supply shortages — evidence, analysts say, that the industry is shifting from a price-driven "chipflation" phase to one led by shipment volume growth. Still, with Micron's gross margin surging to 85%, questions over whether big tech can sustain capital spending at that pace remain a near-term source of volatility.

Won Trading Goes 24-Hour as Markets Await FOMC Minutes

Korea's won-dollar market moved to round-the-clock, seven-day trading starting today, aimed at fixing a structure in which speculative offshore (NDF) trading during Korea's off-hours would spill into the next day's onshore session. Widening the onshore market's scale is meant to absorb offshore-driven volatility, and the roughly 45 trillion won SK Hynix is raising through its ADR — expected to be converted into won for domestic investment — could add further support.

Won weakness and foreign selling don't always move in lockstep, but recent outflows are being read against a backdrop of global liquidity (M2 growth) peaking in February and rolling over, compounded by hawkish signals from major central banks including the Bank of Korea. Wednesday's FOMC minutes, the first released under the new Fed chair, are drawing particular attention as the first real window into board members' internal tone.

Analysts say a clearer path toward Fed rate cuts is what would let companies beyond the hyperscalers ramp up AI investment, lifting chip demand volume and setting up a fresh valuation re-rating for Samsung Electronics and SK Hynix.

NATO Summit Set to Weigh Higher Defense Spending

NATO leaders meet for two days starting July 7 to discuss members' progress toward a defense-spending target of 5% of GDP, along with converting expanded defense budgets into joint weapons-procurement contracts. With Canada's submarine winner possibly announced just before the summit, attention is on what signal it could send about the NATO-aligned defense procurement landscape and what it could mean for Korea.

Windfall Chip Tax Revenue Eyed for New Fund, as Leveraged ETF Rules Face Scrutiny

Presidential chief of staff Kang Hoon-sik said in an interview that the government is pushing to create a "future response fund" to channel unexpectedly large corporate tax revenue from the chip boom into power and water infrastructure for semiconductor clusters. With Samsung Electronics alone expected to post roughly 90 trillion won in operating profit this quarter, corporate tax receipts are set to run well above ordinary projections, and the plan is to earmark that windfall for a specific purpose rather than folding it into routine spending. He added that the government will also revisit its cautious stance on new nuclear plant construction and look at ways to shorten the current seven-to-nine-year build timeline.

Separately, reports say a state capital markets committee will investigate single-stock leveraged ETFs, which have surged since May and are widely blamed for amplifying Kospi's volatility. Industry discussion reportedly includes sharply raising account margin requirements, tightening investor education, and even delisting some existing products.

On Kosdaq, regulators are pushing a tiered listing overhaul that would separate weaker companies from a new "premium" tier of stronger ones. Analysts expect this to draw more activist investors targeting undervalued Kosdaq firms sitting on large cash piles relative to market value, a trend some see as building a new pool of "trusted assets" within the market in the second half.