U.S. chip stocks and the Korean market have become increasingly intertwined lately, and the latest moves suggest that volatility remains.
- U.S. memory stocks Micron and SanDisk were higher in overnight trading late Sunday.
- KOPSI gained a record 18% on Friday.
- Morgan Stanley expects the South Korean market to run 36% higher.
South Korean stocks fell on Monday, dragged down by Samsung and SK Hynix, giving back some of Friday’s record gains and suggesting that concerns over elevated valuations continue to linger.
However, U.S. memory stocks were lifted by a new statement from President Donald Trump signaling a renewed approach to strike a deal with Iran and end the months-long war.
Micron’s shares rose 2.5% in overnight trading late Sunday, while SanDisk’s shares were up 3.3% and the Roundhill Memory ETF (DRAM) was up 2.8%. SK Hynix’s U.S. shares dipped 1%.
U.S. chip stocks and the Korean market have become increasingly intertwined lately due to the heavy weightage of Samsung Electronics, the world’s biggest memory chipmaker, and SK Hynix in the benchmark KOSPI.
On Monday, KOSPI declined 4.5%, with Samsung and SK Hynix shares dropping 7.6% and 3.5% respectively, after record gains on Friday. The Direxion Daily South Korea Bull 3X Shares (KORU) rose 7.4% in U.S. overnight trading.
Monday’s pullback signals the market’s still-fragile sentiment around chip stocks. Although investors initially welcomed signs that leveraged, risk-heavy positions were being unwound, the renewed selling indicates volatility could persist before the market establishes a more durable base.
Morgan Stanley Upgrades Korean Stocks
However, Morgan Stanley on Monday upgraded Korean stocks to ‘Overweight’ from ‘Equal-weight,’ saying the recent “leverage washout” offers investors a better entry point into the AI trade and industrial super-cycle theme, according to a Bloomberg report. KOSPI could rise 36% from its closing level on Friday, the investment firm forecasted.
The recent selloff was “largely technical,” with “the market now past the halfway point in unwinding leveraged ETFs, hedge fund positions, and retail margin,” the analysts said. Morgan Stanley expects valuation support from Samsung and SK Hynix, while also forecasting continued strength in sectors such as industrials, defense, and financials.
SK Group Chairman Chey Tae-won made his first-ever personal purchase of the chipmaker’s stock over the past week, a bullish signal for the business. UBS initiated coverage of SK Hynix’s U.S.-listed ADRs with a ‘Buy’ rating and a $204 price target, echoing the point that the recent pullback in shares creates an attractive entry point.
How Retail Traders Feel About Memory Stocks Now
In the U.S., chip and memory stocks continued their decline this week although the pace slowed. The iShares Semiconductor ETF (SOXX) shed 7.4% last week, with Nvidia, Intel and Micron declining 3.2%, 10.1%, and 14.2% respectively. The Roundhill Memory ETF (DRAM).
On Stocktwits, the retail sentiment was ‘bearish’ for DRAM, ‘bullish’ for MU, SKHY and SOXX, and ‘extremely bullish’ for SNDK. “$MU KOSPI so far today is only down 4% after a massive 18% run-up on Friday. Good sign that the over-leveraged Korean AI players are in fact shook out,” a trader wrote.
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