'Samsung-Hynix' stocks surge 9% then collapse, leaving day traders with instant losses

"I bought in on Wednesday and immediately lost 5 million won ($3,390)." — SK hynix investor

Samsung Electronics and SK hynix — the two largest stocks by market capitalization on the Kospi — have become a playground for day traders, with daily price swings reaching double digits. A growing number of investors who bought in expecting gains are ending the day with heavy losses.

A surge in semiconductor-related stocks on US markets overnight sent Samsung Electronics and SK hynix sharply higher at Wednesday's open, but every investor who bought into the so-called "Samsung-Hynix" pair ended up in the red. Both stocks soared more than 9% at the open before ultimately closing in negative territory.

Samsung Electronics climbed about 6% in early trading Wednesday, recovering the 270,000-won level, while SK hynix surged 9% to reclaim the 2 million won mark. The Kospi also jumped more than 5% in early trading, rising as high as 7,100.

SK Square, the third-largest stock by Kospi market capitalization, surged as much as 10%, while Samsung Electro-Mechanics, ranked fifth, jumped as much as 12%.

The rally was fueled by an overnight surge on Wall Street, where Micron Technology jumped 12% and SanDisk climbed 14%, with other semiconductor-related stocks posting double-digit gains. SK hynix's American depositary receipts also rose 13.75%, reviving investor sentiment in the sector and channeling buying interest into Samsung Electronics and SK hynix.

The gains proved short-lived. Both stocks began surrendering their advances in the afternoon. SK hynix, which had surged nearly 9%, closed down 0.33%. Samsung Electronics, which had also jumped about 6%, gave back all of its gains and closed up just 0.58%.

The reversal appeared to reflect caution ahead of Alphabet's earnings release, scheduled for the early hours of Thursday morning Korea time. If the company's capital expenditure plans outlined during the conference call fall short of market expectations, concerns about slowing semiconductor demand could resurface.

Hwang Hyeon-hui, a broadcaster known as a seasoned investor, said people should not even think about entering the stock market right now.

Speaking on the YouTube channel "Lee Hong-ryeol TV," Hwang said, "A market that swings 7% up and 8% down in a single day is not a place for ordinary investors," adding, "This is a market that favors people who are skilled at short-term trading."

Meanwhile, as Kospi volatility intensifies, the volume of shares forcibly liquidated after retail investors failed to repay margin loans to brokerages has climbed into the 50 billion won range. According to the Korea Financial Investment Association, shares worth 59.6 billion won were sold through forced liquidation of unsettled brokerage receivables on Tuesday.

Unsettled brokerage receivables refer to amounts borrowed from brokerages for up to two days to fund stock purchases — a form of ultra-short-term leveraged investing. If the borrower fails to repay within two days, the brokerage forcibly sells the shares at the market open on the third trading day.

The 59.6 billion won in forced liquidations on Tuesday was the largest single-day total since July 10, when the figure reached 81.6 billion won. It also marked a second consecutive day above the 50 billion won threshold, following 52.8 billion won on Monday.

park@heraldcorp.com