Samsung Electronics and SK Hynix fall out of the trillion-dollar market-capitalization club as South Korea's stock market experiences volatility.
South Korea's stock market has seen a significant downturn, causing Samsung Electronics and SK Hynix to fall out of the trillion-dollar market-capitalization club. Despite a global artificial intelligence boom, both memory-chip giants experienced a sharp reversal from their late-June peaks. Samsung Electronics reported a 1,800% rise in operating profit, yet its stock price fell 45% from its peak. SK Hynix, which transformed into a leading supplier of high-bandwidth memory chips for AI accelerators, saw its shares fall 56% from their peak. To manage this volatility, South Korea has utilized the sidecar mechanism, which suspends program-trading orders for five minutes when futures move by a specific threshold. However, critics argue that the growth of algorithmic trading has weakened the sidecar's effectiveness. While some officials believe the mechanism is a necessary safeguard, others suggest the current sell-off is an inevitable correction after a period of overheating. The government has also suspended new listings of single-stock leveraged ETFs to stabilize the market.