Written by: Little Cake

June 25 might be the most memorable day for Koreans in 2026.

That night, at the Monterrey stadium, the Korean team only needed to draw against South Africa to advance, but ended up losing 0 to 1. Son Heung-min came on as a substitute and touched the ball 29 times throughout the match.

Three days later, the Democratic Republic of Congo made a comeback by scoring three goals to overturn Uzbekistan, and the Korean team, after waiting for 71 hours, was squeezed out of the top 32, ending their 12th World Cup journey in a nearly humiliating manner.

Also on June 25, the stock price of SK Hynix surged to an all-time high. The national pride taken by football was doubled in returns from storage. No one expected that this day would be both the end of Korean football and the peak of SK's stock price curve.

Today, 18 trading days later, at 9:35 AM on July 13, the Korean Exchange activated the circuit breaker mechanism, with the KOSPI intraday drop widening to 6%, and SK Hynix once plummeted 12%, falling below 2 million Korean won, setting a new low since June 11, retracting by 33% from the historical high on June 25.

The Hong Kong stock, a double long Hynix ETF, fell over 22% in a day.

The true national team of Koreans this summer collapsed faster than the football team.

From being crowned to losing it all, it only took three weeks.

To understand the severity of this decline, one must first understand the craziness of the preceding rise.

In the past 12 months, SK Hynix's stock listed in Seoul has risen approximately 850%, with a market capitalization surpassing 1 trillion USD.

On June 22, it set a historical closing record, with market value momentarily exceeding that of Samsung Electronics, ending the latter's decades-long reign as the market value king of Korea. Holding over 56% of the global HBM market share and supplying about 70% of HBM orders for NVIDIA's next generation AI servers, with long-term contracts extending to 2028, and an operating profit margin of 72% in Q1, even higher than NVIDIA.

There is no purer AI storage target in the capital market, and no prouder national business card for Korea.

A young person from Seoul's narrative (joke) has circulated on Zhihu, generally stating: This is her best summer since becoming an adult; she found a job and invested her entire salary into the stock market, earning five years' worth of income, creating an illusion of a human golden age on the streets of Seoul.

The illusion of the golden age lasted less than a month.

News about Meta planning to sell AI computing power surfaced in early July, with buyers interpreting it bluntly: a super-large manufacturer starting to sell "excess computing power" indicates that the market may have oversupplied. Morgan Stanley's chief US equity strategist quickly suggested reducing semiconductor holdings, and the Philadelphia Semiconductor Index has cumulatively dropped over 13% since July. Upon reaching Seoul for the first trading day, the KOSPI fell nearly 8%, with SK Hynix dropping over 12% in a single day, evaporating over 100 billion USD in market value.

In the following two weeks, this market entered a manic state:

On July 3, a deep V rebound occurred, with the KOSPI rising over 5%, triggering a circuit breaker, and algorithmic buying being suspended;

On July 7 and 8, it fell to trigger circuit breakers, with the closing on July 8 down over 20% from the high on June 19, officially entering a technical bear market.

SK Hynix has already seen over 50 trading days this year with daily price fluctuations exceeding 5%; last year this number was 37.

Both rises and falls triggered circuit breakers; the number of sidecar mechanisms and circuit breakers triggered in the Korean stock market in the first half of this year has both broken historical records set during the financial crisis of 2008.

The day that best illustrates the issue was July 7.

On that day, Samsung Electronics released its second-quarter earnings forecast, reporting an operating profit of 89.4 trillion Korean won, an explosive year-on-year increase of 1810%, exceeding market expectations and even surpassing its entire profit for 2025.

The strongest single-quarter performance in history led to a steep drop in stock prices and a circuit breaker for the entire market.

When a stock price already factors in profits far beyond the current profit sheet, no matter how stunning the earnings report, it pertains to an obsolete examination paper. The new exam paper in the market asks different questions: Is AI infrastructure overheated, and can the huge capital expenditures from chip manufacturers be recouped?

The champagne in Nasdaq, the bill in Seoul

In the same week that the Seoul market fell into a bear market, SK Hynix accomplished a monumental event in New York's capital market history.

On July 10, SK Hynix's ADR debuted on Nasdaq with an issuance price of 149 USD, raising 26.5 billion USD, surpassing the record set by Alibaba in 2014, becoming the largest IPO scale for a foreign company in the US, second only to SpaceX's stock issuance last month in US history.

With subscriptions exceeding 7 times and participation from over 500 institutions, it opened at 170 USD on the first day, reaching a high of 177 USD during the day, closing at 168.01 USD, jumping nearly 13% on the first day, with a market value of approximately 1.22 trillion USD at closing, surpassing Micron and taking the top seat globally for semiconductor market value. During the bell-ringing ceremony, CEO Lee Seok-hee declared that the global memory industry is heading toward the most severe supply shortage in history by 2027; Choi Tae-won indicated that demand would grow exponentially in the future.

Champagne in New York, and the bill sent back to Seoul.

This victory, from the day of preparation, began to bleed the local market. The initial benchmark price was based on the closing price of June 23, which was 2,555,000 Korean won; the stock price fell all the way down, forcing the benchmark to be adjusted to 2,425,000 on July 3, reducing the fundraising scale by about 1 billion USD. Every red candlestick during the pricing window period discounted the Nasdaq pricing order.

17.79 million new common stocks are real dilution, with the new shares starting to circulate in Seoul on July 29.

According to Reuters, the company plans to successively convert and transfer over 20 billion USD in raised funds back to Korea around July 15, with the hundreds of billion USD-level foreign exchange demand impacting a foreign exchange market that has already dropped to 1528 won to 1 USD. Because the conversion of common Korean stocks to ADR is restricted, the US stock ADR currently has a premium of about 17% over the Seoul stock price, showing a mirror of drastically different treatments for the same asset in two markets: global funds in New York eagerly pay premiums for scarcity, while holders in Seoul are left to pay for liquidity drainage and leverage unwinding.

The final match that ignited the sell-off this morning came from a performance forecast by the local Korean brokerage KIS.

The report predicts that SK Hynix's second-quarter operating profit will be 60.4 trillion Korean won, a year-on-year surge of 556%, but about 8% lower than the market consensus expectation of 65 trillion. The reason lies within the pricing structure: HBM prices are locked in long-term supply agreements, with contract prices not adjusting to market rates in the short term; when ordinary DRAM spot prices surged about 30% and NAND prices about 50% in the second quarter, Hynix, with the highest HBM proportion, actually received the smallest dividends from this round of price increases. Its largest moat became a drag on average prices in this quarter.

Growing 556%, but dropping 12%. At high stock prices, being not good enough is deadlier than being bad; the market always desires better than expected.

Ants, leverage and an uncontrollable amplifier

What made the same AI pullback result in a series of circuit breakers in Korea? To answer this question, one must examine the market's structure.

The KOSPI index has more than 800 constituent stocks, with Samsung Electronics and SK Hynix accounting for over 43% of the index weight.

In May this year, Korea allowed single stock leveraged ETFs, after which these two stocks and their derivatives once occupied 84% of the trading volume in the Korean stock market.

Southern Eastern’s double long Hynix ETF had an asset size that once surpassed 16 billion USD and experienced an increase of over 1000% within the year, being the largest of its kind globally. Institutions estimate that for every 1% fluctuation in the market, approximately 9 billion USD worth of mechanical rebalancing demand is generated for related leveraged ETFs in Korea. These products rebalance daily, requiring more selling of holdings during declines; the more they fall, the harder they sell, and around July 2, trading of leveraged products linked to Hynix accounted for a large portion of the day’s trading volume of the underlying stock.

In the past month, over 90% of leveraged ETF investors in Hynix have been in a loss-making state.

On the other end of leverage are retail investors.

By the end of May, the balance of credit financing in Korea surpassed 38 trillion won, setting a new historical high. Since the beginning of this year, foreign capital has net withdrawn about 95 billion USD from Korean stocks, continuously selling net for 13 trading days since the peak on June 19, with a single-day net sell of 37.3 trillion won on July 7; during the same period, self-identified "ants" among Korean retail investors net bought 800 billion USD, nearly accepting all sell-offs one-for-one.

Institutions orderly retreated at the top, while retail investors leveraged their positions against the trend, betting on national industries as a belief. When the market rises, national fortunes and leverage mutually enhance; when it falls, both step on each other, with no buffer in between.

However, the bull cards are still on the table.

KIS maintained its buy rating in the same report, with a target price of 3.8 million won, reasoning that as the industry transitions to a 3 to 5-year long-contract structure, the valuation anchor will shift from quarter average price fluctuations to how long high profits can be sustained; CEO Lee Seok-hee bets that the shortage will last until after 2030.

Bears observe a different set of logic: Samsung and SK Hynix's total investment in the next decade is expected to exceed 1,000 trillion won, the Korean government is rebuilding four chip factories, Micron is synchronously expanding production, and the oligopolies are dismantling the supply discipline that supports this round of excess profits; the low price-to-earnings ratios of cyclical stocks historically appear most at the top of profits.

The divergence is not about the survival of the company, but on the cyclical coordinates. The KOSPI at 7200 points and the one-third drop in Hynix represent a deep breath in a super cycle, or the last glance back at the edge of the rooftop, depending on how long the engine of AI capital expenditures will continue to roar.

After being eliminated from the World Cup, Koreans accepted it in three days.

The national fortune stocks did not give them this opportunity; in two days, over 20 billion USD will start to move through currency exchange; by the end of the month, 17.79 million new shares will be listed in Seoul. Having already poured 80 billion USD this year, can the ants catch the next baton?