Korea Market Brief — KOSPI slips again as SK Hynix leads chip selloff, but the won holds firm (Aug 7)

Seoul's benchmark spent Friday doing what it has done for weeks now: opening with conviction and closing with doubt. The KOSPI jumped almost 2% within minutes of the bell, only to reverse and trade as much as 2.2% lower before settling down 0.6% at 6,258.77. It was the second straight down day and, more tellingly, the market's seventh consecutive weekly loss — the longest such streak since December 2022. The whipsaw is the story: after an extraordinary run and an equally violent unwind, Korean equities are still hunting for a floor.

The short version: The KOSPI slipped 0.6% to 6,258 in another volatile session — big gains at the open, chip-led losses by the close. SK Hynix fell nearly 5% and foreigners sold again, but the won firmed to around 1,418 per dollar and battery stocks kept the KOSDAQ's winning streak alive.

What moved the market

The tug-of-war came down to two familiar forces: the AI-and-chips trade and geopolitics. SK Hynix fell 4.88% to 1,422,000 won, extending its weekly slide to roughly 13% — its worst week since mid-July — and dragging the broader index whenever early buying faded. Trade was relatively light at 297 million shares worth 24.3 trillion won ($17.1 billion), and advancers actually outnumbered decliners 552 to 321, a reminder that the headline loss was concentrated in the mega-cap semiconductor names rather than the whole board.

The flows tell the deeper story. Foreign investors sold a net 859 billion won ($606 million) of Korean shares on the day, piling onto a year that has now seen roughly $116 billion in cumulative foreign equity outflows. That persistent selling is what has capped every intraday rally: without foreigners turning consistent buyers, bounces keep running out of fuel. It's worth putting the pullback in perspective, though — the KOSPI is down about 31% from its June 22 record close, yet still sits roughly 48% higher for the year. This is a sharp correction inside a very large advance, not a collapse from a standing start.

Sentiment also took its cue from the Middle East. Overnight, U.S. stocks had ended softer — the Dow slipped 0.85% and the Nasdaq eased 0.06% — amid uncertainty over the Strait of Hormuz, where Iran has been reviewing a preliminary bill that would bar U.S., Israeli and other vessels it deems hostile from transiting the waterway. Oil prices climbed on the risk that access is disrupted, and elevated crude adds another layer of caution to an already jittery market. A countervailing headline — President Trump again suggesting the conflict with Iran could end "pretty soon" — helped spark the strong open before traders faded it.

Sector by sector

The split beneath the surface was stark. Chips lagged: SK Hynix was the obvious drag, with peers like SK Square and Hanmi Semiconductor also soft. Batteries led: on the main board Samsung SDI surged, joined by gains in LG Chem, LG Energy Solution and SK Innovation, while on the KOSDAQ the battery-materials names Ecopro and Ecopro BM powered the index to a sixth straight advance. That rotation — money leaving crowded AI-memory trades and finding EV-battery names — has been a recurring feature of the recent volatility and is exactly why the KOSDAQ has quietly outperformed the KOSPI this week.

Elsewhere it was mixed. Samsung Electronics bucked its chip peers, edging up 0.22% to 231,000 won as bargain hunters stepped in. POSCO Holdings rose about 3.8% and drugmaker Samsung BioLogics gained around 2.8%, while defense heavyweight Hanwha Aerospace jumped 4.08%. On the downside, Hyundai Motor fell 1.12% (though sister automaker Kia rose about 1%), and the day's ugliest single-name move was Lotte Shopping, down nearly 13%. Korea Zinc, Hyundai Mobis, Naver and Samsung Life also fell hard at various points — a broad enough spread of losers to underline that this was a stock-picker's session, not a uniform sell-off.

The won and the macro picture

If equities looked fragile, the currency told a steadier story. The won strengthened to around 1,417-1,419 per dollar, firming by roughly 6.4 won on the day and heading for a sixth consecutive week of gains. That resilience is notable given the foreign selling in stocks, and it points to a few supports working in the currency's favor: suspected official intervention smoothing moves, and the repatriation of proceeds from SK Hynix's recent ADR listing in the United States bringing dollars home to be converted. A Reuters poll this week showed investors turning net bullish on the won for the first time in more than ten months — a meaningful shift after a long stretch of pessimism.

On policy, Washington remained a swing factor. Trump signed a proclamation imposing a 15% tariff on polysilicon derivative products, a move that lands on the solar and materials supply chain and is the kind of trade headline Korea's export-heavy market watches closely. For now the read-through to the big exporters was secondary to the chip and oil narratives, but tariffs remain a slow-burning risk for an economy this leveraged to global trade.

What to watch next

Two conditions, as one strategist framed it, would mark a genuine floor: foreign buying turning consistently positive, and the Hormuz situation actually de-escalating into a real reopening framework rather than headline ping-pong. Until both land, expect the pattern to persist — violent daily swings in either direction, with position sizing mattering more than getting the direction right.

Near-term catalysts to keep on the radar: any concrete movement on the Iran-Hormuz standoff and where oil settles; the next batch of Korean macro data and any Bank of Korea signals; developments in the U.S. tariff picture after the polysilicon order; and, above all, whether the foreign outflow that has defined 2026 shows any sign of slowing. The KOSDAQ's battery-led streak will also be worth watching — a sixth straight gain is a genuine bright spot, but streaks in this market have been fragile.

For now, Seoul closes the week still searching for equilibrium: bruised on chips, buoyed on batteries, and quietly steadied by a firmer won.

This is market information, not investment advice.