SanDisk-driven Semiconductor Correction Sends KOSPI Down Over 4%...Anti-Stock-Suppression Tax Bill Criticized as 'Much Ado About Nothing'

At the start of the broadcast, the KOSPI was down about 3.8% at 6,342 points, while the KOSDAQ moved in the opposite direction, up about 0.6% near 805 points. The won held steady around the 1,418 level, with talk even emerging of a possible move into the 1,300 range. On the supply-demand side, foreign investors were net sellers in both the spot and futures markets.

By the close, losses had widened, with the KOSPI down about 4.6% at 6,294 points and the KOSDAQ down about 0.2% at 797 points. Foreigners sold about 2.3 trillion won on the exchange, roughly 240 billion won on the KOSDAQ, and more than 500 billion won in the futures market. Samsung Electronics and SK Hynix plunged about 6% and 9%, respectively, dragging down the index, while bank stocks and some defense stocks held up relatively well. On the KOSDAQ, Alteogen outperformed with a roughly 4% gain, and among KOSDAQ names entering earnings season this week, InBody surged about 21%, underscoring a market driven by individual earnings stories.

During the session, domestic memory-related stocks weakened across the board following U.S. NAND flash maker SanDisk's earnings release, triggering a KOSPI sell-side sidecar and briefly pushing the index below the 6,300 level intraday. New York stocks closed lower overnight, led down by tech names in late trading; the Dow held its record high, but the Nasdaq Composite fell about 0.8%. AMD plunged more than 7%, and the Philadelphia Semiconductor Index also weakened.

The expansion of volatility on Wall Street was attributed to explosive growth in the options market. Index options and ETF options — particularly ultra-short-dated one-day options — have grown sharply, amplifying both market-wide and individual stock volatility, according to the explanation given. Figures cited showed S&P 500 zero-day options trading exceeding 20 million contracts a day, up more than 46% from the start of the year.

Uncertainty over new Iran-Oman-U.S. negotiations on a Hormuz shipping route also weighed on investor sentiment. News emerged that Iran and Oman had agreed to open a temporary route lasting two to four months, but with reports of a communication gap between Iran's president and its supreme leader, along with unresolved details such as transit fees, the assessment was that a final agreement remains uncertain.

SanDisk's second-quarter revenue and earnings per share both topped market expectations, with gross margin reaching 84.9%, marking a record-high quarter in its own right. However, next-quarter guidance of revenue between $10.3 billion and $10.8 billion (versus a market estimate of $11.1 billion) and earnings per share of $44 to $46 (versus a market estimate of $45.5) merely met market expectations at the midpoint, sending shares down about 7.8% in after-hours trading. Analysts attributed the sell-off to disappointment following excessively high expectations, given the stock had surged roughly 3,000% (about 30-fold) over the past year. Western Digital's results were also flawless on their own merits, yet the stock still plunged about 11% overnight.

Panelists noted that it would be excessive to extrapolate SanDisk's sharp swings into a broader peak thesis for the entire semiconductor industry. According to Bank of America's proprietary bubble-risk gauge, only 17 stocks within the S&P 500 fall into the bubble-risk category — far fewer than the 50 to 100 seen at the peak of the dot-com bubble — and they account for just 2.4% of market capitalization. Given that the essence of a bubble is the absence of substance, and current valuations are backed by real earnings and figures, the view was that it is premature to declare a bubble based on sharp price swings alone.

SK Hynix suffered an erroneous trade on the Nextrade (NXT) alternative trading system, where 11 shares were executed at the opening limit-down price in the pre-market session. A similar incident occurred on July 29, when a single share was executed at limit-down immediately after the pre-market open, forcing the liquidation of about 83 billion won worth of positions on an overseas derivatives exchange. A similar case has now recurred. The previous day also saw one share each of Samsung Electro-Mechanics and Alteogen executed at limit-up. Panelists argued that the system's failure to filter out such small-lot erroneous trades is a clear institutional flaw, and called for urgent fixes such as restricting execution of small-volume trades that deviate beyond a certain range from the prior day's closing price.

SK Hynix began giving back its gains from the previous evening's trading session after reports emerged of a planned U.S. pre-IPO stake sale for its subsidiary Solidigm, and fell about 9% during the session. The company stated via disclosure that nothing has been finalized, but market sentiment increasingly treats the IPO as a foregone conclusion, citing business unit reorganizations and job postings that list IPO experience as a preferred qualification. Compounding the damage to sentiment was a Reuters report indicating that a shareholder-return plan would not be detailed until year-end.

Cosmetics maker APR posted an estimated second-quarter operating profit of about 190.6 billion won, up 134% year-on-year, surpassing Amorepacific's second-quarter operating profit. Strong performance in its North American and European beauty businesses was cited as the main driver, and Hanwha Investment & Securities raised its target price to 550,000 won, calling the results 'a model answer in every sense.' The stock rose again on the day, closing near 375,000 won for a sixth consecutive day of gains.

Early in the broadcast, panelists said Elon Musk's comments related to SpaceX effectively put an end to the debate over an AI bubble and a semiconductor peak. Although shareholders expressed disappointment over sluggish performance at Starlink-related businesses, attention focused on Musk's statement that the payback period for AI capital expenditure is only about a year. By comparison, Google and Amazon each drew market applause even with three-year payback periods, making Musk's figure remarkably fast.

Musk assessed that semiconductor companies will be fine even though their shipment volumes are growing 20% a year, because demand is growing 200% a year. He went on to stress the basic economic principle that when demand grows faster than supply, prices rise rather than fall, expressing frustration that economic media and outlets fail to grasp this. Panelists said this served as a reminder that recent semiconductor analysis has overemphasized the supply side while underweighting demand-side analysis.

The power equipment sector showed a stark divergence between earnings and share prices. Domestic power equipment makers had already logged order intake in the first half nearly matching last year's full-year total, with positive outlooks for order backlogs, yet on the day Hyosung Heavy Industries fell 7%, LS Electric fell about 3%, and HD Hyundai Electric fell about 2%. From their respective highs, shares are down 77% for LS Electric and 43% for Hyosung Heavy Industries, while HD Hyundai Electric has been cut roughly in half, from a high of 1.44 million won to 750,000 won. The view was that with solid earnings but excessively depressed share prices, much of the valuation burden has already been worked off, making this an attractive entry point.

Panelists pointed out that domestic listed companies' earnings-disclosure practices differ fundamentally from U.S. market norms. U.S. companies typically lay out concrete shareholder-return policies — dividend plans, share buyback schedules — at earnings releases, whereas domestic companies tend to emphasize only the earnings figures and give perfunctory answers to questions about shareholder returns. This practice was cited as the root cause of companies failing to keep pace with the intent of the revised Commercial Act, with a call for the government and political circles to create a forum where concrete guidance can be worked out jointly with companies.

News emerged that President Lee Jae-myung will personally take charge of semiconductor industry matters following his overseas trip. At 2 p.m. on the 10th, he will chair the second public-private joint inspection meeting on the three megaprojects at the presidential office, with attention focused on whether concrete figures will be presented on preparations for electricity, water, and residential infrastructure — the key infrastructure for the semiconductor industry. The president reportedly expressed strong determination to see groundbreaking take place within his term.

One of the key issues is the airport relocation under review for a major Samsung Electronics semiconductor site, as the local government subject to relocation is demanding firm support in exchange for accepting the airport. Analysts said it remains to be seen whether the related knot will be untangled at this meeting.

Analyst Gon Dang-gwon joined the broadcast and offered a reflective take on recent foreign fund-flow trends and market interpretation. Regarding the phenomenon of foreign investors continuing to sell net even during recent share-price gains, he admitted it had been complacent to interpret this simply as 'profit-taking rebalancing.' He acknowledged that the analysis had leaned too heavily on the supply side (valuation, fund flows) without sufficiently considering the demand-side reasons behind why foreigners were selling.

Analyst Gon Dang-gwon reiterated the need to weigh both supply and demand sides evenly in future market interpretation, advising that a multi-angle analysis is needed rather than becoming fixated on a single view. This diagnosis echoes the discussion earlier in the broadcast on Musk's remarks about semiconductor supply and demand, and can be read as a caution against the market's recent tendency to overreact to supply-side news such as earnings guidance.

CEO Park Si-dong offered a point-by-point critique of the government's recently controversial tax reform proposal related to the 'anti-stock-price-suppression law.' He explained that the law's original intent was to prevent controlling shareholders from artificially depressing share prices to reduce inheritance or gift taxes, and that the core idea should be to tax based on a company's substantive value, such as net assets, so that lowering the share price does not reduce the tax bill. However, he pointed out that the government's proposed amendment to the Inheritance and Gift Tax Act still uses 'how much the share price has fallen' as its criterion, which is a fundamentally flawed approach.

Specifically, the government's proposal designates as suspected 'stock-price-suppression' cases where a company's PBR ranks in the bottom 25% of the KOSPI or bottom 10% of the KOSDAQ for 12 out of 13 half-year periods (about six and a half years). The problem is that a company only needs to escape that ranking once or twice during the period to avoid the regulation, meaning companies deliberately suppressing their share price actually have an easier loophole to exploit. He also noted that since this is a legal requirement, it must be clear and unambiguous, yet whether a company is captured can shift depending on other companies' relative rank changes even when its own conduct is identical — raising concerns of potential unconstitutionality.

Criticism also extended to the penalty design. Under the proposal, fair value is assessed at 1.3 times the actual value, with tax levied on the difference — meaning that, for example, if a 1 trillion won company is undervalued down to 100 billion won, the penalty would come to only about 130 billion won, a calculation that was shown to actually increase the incentive to avoid inheritance tax. In the end, exemption is even possible if the taxpayer demonstrates to the National Tax Service's valuation review committee that there was no intent to avoid tax, rendering the measure essentially ineffective.

CEO Park Si-dong stressed that law and markets operate on fundamentally different principles. Law exists to punish wrongdoing, whereas the core of markets is to incentivize better behavior — yet this tax proposal, he argued, is mired in technical tax-avoidance prevention without any overarching standard to steer the market in a better direction, such as requiring broad improvement efforts from all companies with a PBR below 0.8. With criticism and pushback emerging even within the ruling party, he forecast that discussion and revision in the National Assembly will be inevitable.