Flash crash briefly fells SK Hynix while SocGen strategist says Korean shakeout is nearly done

By Jules Rimmer

Rogue print in pre-market trade sent SK Hynix stock hurtling 30% lower

SK Hynix shares were rocked in premarket trade in Seoul.

In pre-market trading in Seoul Thursday, a tiny trade worth just 12.8 million won ($9000) prompted a 30% plunge in the share price of SK Hynix. Although the stock recovered later, it still ended the day with another thumping 10% loss.

The SK Hynix flash crash took place on the Nextrade exchange, a new facility only established in 2025 to allow Korean shares to trade before and after the official hours of the Korean Stock Exchange. A similar flash crash of around 20% occurred on the same exchange in late July.

SK Hynix ADRs (SKHY) fell 6% in premarket trade.

For one strategist, Manish Kabra of Societe Generale, this is now all too much. He's looking at the Korean market, and its lodestar stock SK Hynix (KR:000660) in particular, and finding something surprising. He observes that the market is now trading on a twelve months forward price-to-earnings multiple that is 50% lower than its long-term average, while SK Hynix share price is discounting a profit margin of just 40% next year whereas analysts currently have 83% plugged into consensus.

Souh Korea discounting an extreme 50% earnings downturn

The volatility in Korea is nothing new. The KOSPI volatility index is trading at 77, which implies a daily move of around 4.8% in either direction.

The Kospi index KR:180721 has now fallen 32% from its all-time high, set as recently as June, while last night's slump brought the SK Hynix decline from its record to 50%. According to estimates compiled by FactSet, the stock trades on 2027 earnings of just 3.2 times, although the present weakness in the share price implies a fair degree of skepticism in the market towards those forecasts.

For Kabra, though, who outlined his thoughts in a note to clients Thursday, "the biggest deleveraging phase in Korean equities is nearly complete."

This comes despite recent increases in the level of capex commitments by hyperscalers and comments earlier this week from Elon Musk about the upside to chip prices given the severe imbalance between the supply of advanced semiconductors growing at 20% annually and demand growing around 200%.

Sentiment towards the memory chip makers was dented Wednesday by weaker-than-expected guidance from U.S. peer Sandisk. (SNDK) The U.S. company's stock fell 5% Wednesday and then another 9% in premarket trade.

-Jules Rimmer

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08-06-26 0608ET