🤹 The South Korean KOSPI tanked nearly 10% in a single day — the worst session in years. The exchange triggered the so-called "circuit breaker" twice, halting trades. The index broke below 9,000 points and momentarily closed at 8,203. The paradox is that this isn't a crash of a broken market. And with my ETF on Korea, EWY, as you can guess, I've got a bit of an abusive relationship going on.

🔥 KOSPI was the hottest market on the planet — even after the crash it's up 95% since the start of the year, and yesterday it closed at an all-time high. This is a sharp exhale from a market that soared too high and too fast.

👉🏻 The epicenter — Samsung and SK Hynix. Both fell more than 12%. These two stocks accounted for up to 70% of the entire index's growth this year. SK Hynix added 292% since the start of the year, Samsung — 159%. When an asset triples, any nervousness becomes an avalanche of profit-taking.

☝️ Three reasons for the meltdown that converged together:

👉🏻 Doubts about whether hyperscalers (Google, Meta, Amazon) can continue to burn cash on AI. Samsung and Hynix memory chips are the "picks and shovels" of this frenzy. 👉🏻 Fear that the Fed will raise rates more than once in 2026 to curb inflation. 👉🏻 A massive outflow of foreign capital — tens of billions a year, mainly from Hynix.

🏃‍♂️ Next, the wave moved west. Nasdaq 100 futures dropped by 2.7%, Micron was down nearly 9% in pre-market, and the Japanese Nikkei lost 3%.

😳 Key date — Micron's report on June 24. Its forecast for HBM memory prices will show whether this is profit-taking after the rally or the start of something more serious. Because the issue is broader than just Korea: if even the physical memory producers for every AI system on the planet turned out to be overvalued — what about the rest of the AI assets?

🤷‍♂️ The question is rhetorical overall.

Mykyta Huppal | ProInvestments

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