Bad week for the 'ants' as ripple effects of Korean crash spread out across Asia

By Jules Rimmer

While Korea was closed Friday, the chips are still down for memory stocks

Nobuo Hayasaka, CEO of Kioxia Holdings Corp., rings a bell marking the company's debut on the Tokyo Stock Exchange in 2024. Kioxia was the largest company in Japan but has halved in value over the last month.

It was a bad week for "the ants," as South Korea's army of retail traders are known colloquially, as 1.2 million of them were clobbered with margin calls. That's more than 3% of the country's adult population, illustrating the feverish extent of stock-market speculation and the danger of leverage.

Those stats were provided in a desk note to clients Thursday by Goldman Sachs trader Ioannis Blekos, who added that, this week alone, around 350,000 retail accounts were liquidated amid the Korean market collapse KR:180721. However, while markets in Korea remained closed Friday for the Constitution Day holiday, providing welcome respite for fund managers, the waves made by the Kospi selloff were washing up on other shores.

In Japan the declines were led by the premier semiconductor play and former market darling Kioxia Holdings (JP:285A), which slumped 16%, and other chip plays like Ibiden (JP:4062), Tokyo Electron (JP:8035) and Sumco (JP:3436), which witnessed losses between 8% and 10%.

Despite announcing a beat-and-raise performance in a splendid second-quarter earnings release Thursday, Taiwan Semiconductor Manufacturing Co. (TW:2330) succumbed to gravity and dropped 7%.

Those losses followed on another hefty retreat in the Philadelphia Semiconductor Index SOX. Its 4% drop on Thursday took its 2026 peak-to-trough decline to 19% and the cusp of a technical bear market. The index was lower by a further 4% early Friday.

It's important to put these dramatic share-price reversals into context. Kioxia Holdings has delivered a return to investors of 359% in 2026; TSMC, 44%; SK Hynix (KR:000660), 172% ; and Samsung, 112% (KR:005930). Moreover, earnings forecasts are rising as stocks are falling, so the valuations on most semiconductor plays are becoming more compelling.

The wipeout in semiconductor sentiment reflects positioning more than fundamentals. Other than TSMC, both ASML (NL:ASML) and Micron (MU) recently announced robust earnings. All the chip makers report that for the foreseeable future supply cannot meet demand.

In his Substack post headlined "Dark Side of the Boom," though, market commentator Stephen Innes remarked of TSMC that when "good news cannot lift a stock, the market is no longer trading the news. It is trading the weight of everyone already sitting in the position."

Innes wrote, "South Korea shows how quickly a normal correction can become mechanical when leverage, margin calls and rising volatility begin feeding one another."

Some positive nuggets are starting to emerge from the rubble, however. In his weekly fund-flow insights published Friday, Citi's David Chew revealed that Korea and Taiwan exchange-traded funds saw an influx this week of $6.4 billion and $2.8 billion, respectively. He also observed that, after months of heavy international outflows from Korea, last week witnessed a $500 million inflow in an encouraging trend reversal.

In China, the $8.6 billion IPO of semiconductor company CXMT was 250 times oversubscribed, indicating continuing investor enthusiasm for the sector.

Separately, steps announced by the Financial Services Commission in Korea to triple the minimum deposit required to open a brokerage account and to prohibit the issuance of new leveraged products on its benchmark heavyweights should help to impose some form of order on the domestic market.

-Jules Rimmer

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07-17-26 0955ET