Shares of South Korean memory chip behemoths Samsung Electronics and SK Hynix tumbled sharply on Monday, dragging the country's KOSPI index down as much as 4% and weighing on technology stocks across the Asia-Pacific region. Market sentiment has turned cautious, with investors trimming tech exposure while awaiting Nvidia's earnings this week for crucial signals on the artificial intelligence trade's outlook.
On August 25, Samsung Electronics fell more than 4% during intraday trading, while SK Hynix dropped over 6%, together accounting for the largest contribution to the MSCI Asia-Pacific Index's 0.5% decline, though both have since pared some losses. The pressure on Samsung Electronics' shares partly stems from a shareholder return program unveiled last Friday that missed market expectations. Despite announcing plans to return between 90 trillion and 110 trillion Korean won (approximately $65 billion to $80 billion) to shareholders this year—roughly five times the size of its 2020 record—analysts noted the payout still fell short of market estimates and lacked measures like treasury stock cancellations that would more directly boost the share price.
SK Hynix faces internal headwinds of its own. Union members voted down a tentative wage agreement on Tuesday, with 50.08% of the 15,045 employees who participated casting反对 votes. The deal had included a 6.3% pay raise and revisions to a profit-sharing bonus scheme, with 40% paid in cash and 60% in company stock. The union is expected to restart wage negotiations with management.
Monday's decline in Asia-Pacific tech shares extends the selloff seen on Wall Street the previous session. U.S. semiconductor giants were dumped on Monday, with the Nasdaq 100 Index falling nearly 1% and Nvidia posting its longest losing streak since 2022. Nvidia is slated to report earnings on Wednesday, and markets will closely watch whether its results can put an end to the recent weakness in chip stocks.
Where Markets Are Heading Now
South Korea's KOSPI Index carved out a pronounced "V-shaped" recovery intraday, initially plunging 4.3% to 6408.82 points before bouncing back. As of this writing, the KOSPI stood at 6531.74 points, down 2.14%, with Samsung Electronics off about 3% and SK Hynix down roughly 5%.
Japan's equity market also opened lower, with the Nikkei 225 slipping 0.9% before recovering into positive territory during the session. Among individual stocks, Kioxia Holdings fell nearly 3%, while Advantest and Panasonic Holdings each dropped over 3%. On the macro front, former Bank of Japan board member Seiji Adachi said the central bank is highly likely to hike rates next month and could move again as early as January next year. He warned that maintaining current policy could reignite yen selling, pushing up import costs and accelerating inflation. "The BOJ has essentially been backed into a corner, and markets have almost fully priced in a rate hike. If the BOJ doesn't act, the yen could weaken sharply again."
U.S. Treasury yields remained elevated, with the 10-year note at 4.71%. Reports had suggested the U.S. Treasury might tap its cash reserves to buy back higher-yielding older debt to lower borrowing costs, but Treasury Secretary Scott Bessent gave no clear signal on debt management changes in subsequent remarks. "We haven't bought a single bond," Bessent said in response to questions at a press conference.
Gold edged lower, with spot prices falling 0.2% to around $4,640 per ounce, after climbing to their highest levels since May. Concerns about the dollar's outlook stemming from potential Fed intervention in the bond market have provided support for the precious metal. Bitcoin, meanwhile, rose for a third consecutive day, breaking above $80,000 for the first time since mid-May. According to Bloomberg strategist Mark Cranfield, the simultaneous strength in gold and cryptocurrencies points to shared market worries about the dollar's long-term weakening trajectory.
Nvidia Earnings and Jackson Hole Take Center Stage This Week
Investors are weighing geopolitical risks against a dense calendar of economic data and corporate earnings this week, with the tech sector's outlook emerging as a key barometer for overall risk appetite, according to Bloomberg. Nvidia's earnings are viewed as a vital gauge of confidence in the AI trade, which has come under sustained pressure in recent months amid growing doubts about whether massive AI spending can translate into meaningful profits.
Chris Larkin of Morgan Stanley's E*Trade said: "Details of U.S. economic sanctions on Iran, the Treasury's efforts to push down long-term yields, and economic data will largely shape the market sentiment backdrop. But Nvidia and other tech earnings will be a major factor influencing market momentum."
Richard Reyle, Chief Investment Officer at Questar Capital Partners, pointed out that Nvidia's earnings and a speech by Federal Reserve Chair Kevin Warsh at the Jackson Hole symposium on Friday constitute the two pillars of this week's market. "These two events are usually unrelated, but Nvidia needs to deliver strong results to steady one leg of the stock market, and Warsh needs to provide clear guidance on the path of interest rates to steady the other."