Samsung Posts Record Profit, Yet Kospi Sinks and Triggers Sidecar as Foreign Selling Cascades

Kospi Plunges 6%, Sidecar Triggered

The Kospi fell as much as 6% intraday to around 7,458 points, while the Kosdaq dropped up to 3%. Samsung Electronics and SK Hynix each slid about 9%, dragging the index down and triggering a sidecar halt — an unusual level of volatility that has also produced repeated circuit-breaker events over the past month.

Foreign investors extended their net-selling streak to 13 consecutive sessions, offloading over 2 trillion won on the day alone; cumulative net selling since the start of the year has reached roughly 190 trillion won. Analysts point to the market's heavy concentration in Samsung Electronics and SK Hynix — over 50% of Kospi market cap, or 64% including related large caps — combined with leveraged ETF structures, which amplify selling in a handful of stocks into index-wide selling dominoes.

The Wall Street Journal warned that Korea's stock market could turn into a 'Squid Game' due to its concentration in Samsung and SK Hynix, leveraged products, and foreign capital outflows. Still, commentators stressed that fundamentals and earnings themselves show no cracks — mechanical foreign selling knocking down the first domino should be seen as a separate, flow-driven phenomenon.

Samsung's Record Quarter, SK Hynix ADR Draws Strong Demand

Samsung Electronics posted preliminary Q2 revenue of 171 trillion won and operating profit of 89.4 trillion won, both records, beating the consensus estimate of 84.8 trillion won. Excluding an estimated 20 trillion won bonus provision, operating profit would have topped 110 trillion won. That surpasses the recent quarterly operating profits of global tech giants including Nvidia, Apple, and Microsoft, effectively making Samsung the world's most profitable company this quarter.

Despite the blowout results, foreign investors sold heavily on profit-taking, sending the stock down 8-9%. Foreign ownership fell to its lowest level in 16 years. The drop reflects lingering uncertainty over whether hyperscalers will sustain their capex, along with broader AI-bubble concerns. Samsung's cash and short-term financial assets are expected to reach around 200 trillion won after this quarter and could exceed 300 trillion won by year-end, fueling speculation about expanded investment and shareholder returns.

SK Hynix is set to list ADRs in the U.S. this week, with early signs of strong demand in its bookbuilding process. Three cornerstone investors — Baillie Gifford, Coatue, and Situational Awareness — have committed to buying about $7 billion worth of shares, roughly 25% of the total offering. Despite leading the HBM market, SK Hynix trades at a discount to Micron, and investors are watching whether a U.S. re-rating could lift the stock at home as well.

Hanwha Ocean lost out on Canada's submarine program, with Germany's ThyssenKrupp Marine Systems selected as preferred bidder. The decision appears to have hinged on NATO alliance cooperation factors. ThyssenKrupp shares jumped over 10% in Germany, while Hanwha Ocean plunged about 23% to around 88,600 won, its lowest level in a year. Some analysts called the drop excessive given the company's proven technical capability and other wins, including a Korean destroyer contract and its role in U.S. shipbuilding cooperation.

Nvidia Substrate-Delay Report Fizzles, Cosmetics and Consumer Names Close the Gap

Semiconductor analysis firm SemiAnalysis reported that Nvidia's next-generation AI server, Kyber, could be delayed by about a year due to PCB substrate defects, triggering a sell-off in substrate makers Murata and Samsung Electro-Mechanics. Nvidia denied the report, and its shares closed slightly higher, with Micron and broader chip indices mostly rebounding. Unverified reports reversing within a day highlight the need to separate fundamentals from short-term flow noise.

Meanwhile, consumer and domestic-demand names with little AI exposure — cosmetics, department stores, hotels, convenience stores, and casinos — rallied. Cosmetics exports, including to the U.S., have kept growing steadily, but share prices had lagged behind export data amid the market's heavy chip concentration. With megacap chip stocks pausing, that gap between exports and equity performance appears to be narrowing.

Fed Stance and AI Bubble Debate Loom as Key Variables

Panelists noted that several key variables for the second half remain unconfirmed — the Fed's policy stance, whether Big Tech sustains earnings and capex, and whether volatility will actually ease. According to U.S. media reports, the U.S. Treasury Department is reportedly discussing internally the risk of an AI bubble, a factor cited as contributing to the global tech sell-off, including in semiconductors.

Hanwha Ocean's Submarine Bid Falls Short Ahead of NATO Summit

Canada selected Germany's ThyssenKrupp Marine Systems as preferred bidder for its submarine program, dealing Hanwha Ocean a setback just ahead of the NATO summit. Analysts say Germany's edge came largely from alliance-level security cooperation, including reshuffling delivery commitments already made to Norway. President Lee Jae-myung is set to attend the NATO summit, where President Trump is also expected, with defense-spending discussions likely — raising questions about what diplomatic and economic outcomes may follow.

Debate Over Leveraged-Product Curbs and Pausing Pension Rebalancing

Amid recurring sidecar and circuit-breaker-level volatility, lawmakers have floated policy responses. Some have called for tighter oversight or restrictions on leveraged products, while others have suggested temporarily pausing the National Pension Service's rebalancing. With concentration in a few megacaps and leveraged ETF mechanics amplifying sell-offs, commentators say regulators and industry need structural fixes.

[Park Si-dong] A Case for Raising Cash Allocation in H2

Park Si-dong argued for a defensive stance over the short July-August window, recommending cash allocations of around 30% to keep dry powder for buying dips. With too many variables still unresolved — earnings sustainability, Fed policy, and whether volatility will actually calm down — he said investors need the flexibility to buy on drops and sell on rallies. Within equity holdings, he suggested splitting roughly evenly between existing AI/semiconductor leaders and more defensive names such as financials, shipbuilders, and defense stocks that can balance out flow-driven swings.

[Lee Kwang-soo / 'Mr. Lee'] 'Stock Prices Eventually Converge With Earnings'

Lee Kwang-soo, appearing under the pseudonym Mr. Lee, compared the gap between Samsung's earnings and its stock price to walking a dog: normally the owner (earnings) trails behind the dog (stock price), but this time earnings have surged so fast that the market can't keep pace — an unusual dynamic, in his view. Comparing Samsung's operating profit directly with global tech giants, he argued Samsung's market cap remains undervalued and expressed confidence that the stock will eventually converge with its earnings.

He cautioned against dismissing today's post-earnings drop as already priced in, noting that no one predicted a roughly 90-trillion-won quarterly operating profit at the start of the year. While the market may behave like a voting machine in the short run, he said, over time it functions as a weighing machine that honestly reflects a company's fundamentals — urging investors to take a longer view.