KOSPI dives on fall of Samsung

By Nam Hyun-woo

Korea’s benchmark KOSPI plummeted on Monday, as its kingpin Samsung Electronics slid on a Morgan Stanley report cutting its view of the tech giant.

The KOSPI ended at 2,507.81, down 36.52 points or 1.44 percent from Friday. Given the index had been hovering over 2,550 points in recent weeks, the dip worried investors. It made a solid start on strong performances of foreign bourses, but soon dropped to as low as 2,506.69 points.

The benchmark index was largely dragged down by Samsung Electronics. The tech giant closed at 2,632,000 won, down 5.08 percent from the previous session. It was the lowest this month.

Samsung Electronics suffered as Morgan Stanley said in its Sunday report that the current cycle in memory chips will likely peak soon and the company’s earnings will not likely grow next year.

The report downgraded its recommendation from “overweight” to “equal-weight” and lowered its price target to 2.8 million won ($2,574.95) from 2.9 million won.

“We see downside risk as NAND flash memory chip prices have started to reverse in the fourth quarter of 2017. Meanwhile, visibility on DRAM supply-demand dynamics has reduced beyond the first quarter of 2018,” the report said.

NAND is a crucial building block of mobile devices like smartphones while DRAM is used for desktop and laptop computers.

Following the report, Morgan Stanley led a series of foreign brokerages in selling Samsung Electronics shares, offloading more than 32,800 shares.

The report is creating a ripple effect throughout the entire bourse. On the tech-heavy KOSDAQ market, most info-tech firms went down, while Samsung affiliates such as Samsung SDS and Samsung SDI tumbled on the KOSPI.

Samsung SDI lost 4.3 percent to close at 222,500 won, while Samsung SDS dropped by 3.23 percent to end at 194,500 won.

SK hynix, another leading chipmaker here, was also affected by the report. It went down 2.35 percent to close at 83,100 won.

“The KOSPI was affected by net selling of foreign and institutional investors as well as the Morgan Stanley report,” a Hana Financial Investment analyst said. “Solid IT stocks will likely rebound after concerns on offerings and fundamental are resolved.”