Four to six out of every 10 retail investors who bought Samsung Electronics (005930.KS) and SK hynix (000660.KS) are now sitting on losses, as escalating geopolitical uncertainties including war have amplified volatility in the Korean stock market. Individual investors who stepped in to buy the dip have instead found themselves caught in a downturn.
◇ Six in 10 Hynix Investors in the Red — Loss Ratio Surges
As of March 31, 61.8% of SK hynix investors were in loss territory, according to NH Investment & Securities (005940.KS) data released on April 3. Considering the ratio stood at around 27% as recently as mid-March, the number of investors underwater more than doubled in just two weeks.
Samsung Electronics faces a similar situation. The share of investors in loss positions reached 41.57% over the same period, surging more than 20 percentage points from 21% on March 15. The rapid share-price declines have swiftly eroded retail investors' portfolio returns.
Just a month earlier, both stocks had been market-leading names, extending rallies and setting new highs. SK hynix climbed to a record 1.099 million won on February 26, while Samsung Electronics reached a new all-time high of 223,000 won on February 27. Since then, however, war-related variables and other external uncertainties have triggered a sharp correction.
Even as share prices plunged, retail investors ramped up their buying. According to Korea Exchange (KRX) data, Samsung Electronics and SK hynix shares fell 23.3% and 26.5%, respectively, during March. On April 2, Samsung Electronics closed at 178,400 won, down 5.91% from the previous session, while SK hynix ended at 830,000 won, off 7.05%, as hopes for a near-term ceasefire faded.
Despite the selloff, the two stocks ranked first and second in net retail purchases over the period. Individual investors net purchased 16.8172 trillion won ($12.4 billion) of Samsung Electronics and 7.0705 trillion won ($5.2 billion) of SK hynix. Even after Google's "TurboQuant" announcement late last month triggered a sharp drop, retail investors bought more than 1.9 trillion won and 1.1 trillion won worth of the two stocks, respectively, snapping up shares at lower prices.
The scale of buying also expanded. In February, net retail purchases totaled 7.4974 trillion won for Samsung Electronics and 4.5466 trillion won for SK hynix. In March, both figures nearly doubled. Retail money flowed in even more aggressively during the correction.
◇ "Semiconductor Earnings Are Strong" — Next Week's Results a Watershed
Securities analysts say the semiconductor industry's fundamentals remain solid, regardless of short-term volatility. Expectations are high for an earnings surprise in the first-quarter results due next week. According to FnGuide, the consensus first-quarter operating profit estimate for Samsung Electronics stands at 32.4681 trillion won, while SK hynix's consensus is 31.1761 trillion won.
Chae Min-suk, a researcher at Korea Investment & Securities, said, "Memory contract prices are rising rapidly, independent of spot prices." She added, "DRAM prices have reached historically high levels, and we need to pay attention to the fact that the profit level itself has fundamentally changed compared to the past."
Risks remain, however. Analysts warn that rising oil prices and supply chain disruptions from a prolonged Middle East conflict could heighten short-term volatility. Song Myung-sub, a researcher at iM Securities, said, "Raising target prices is contingent on the war ending in the short term." He added, "If it drags on, stagflation and liquidity contraction would make target price downgrades inevitable."
