SK Hynix Weakens on DeepSeek Shock... Naver and Kakao Surge

After the Lunar New Year holiday, the domestic stock market opened lower. The impact of Chinese AI company DeepSeek, which shocked global stock markets during the holiday period, also affected the domestic market. While SK Hynix plunged over 11% in early trading, Naver and Kakao showed strength.

As of 9:30 a.m. on the 31st, the KOSPI opened down 2.47 points at 2534.33 and continued to decline. Foreigners are net sellers with 591.6 billion KRW, while individuals and institutions are net buyers with 330.4 billion KRW and 253.4 billion KRW respectively. The KOSDAQ, which also opened lower, saw foreigners net selling 30.4 billion KRW, continuing the downward trend. Individuals and institutions are net buyers with 31 billion KRW and 4 billion KRW respectively.

The KOSPI index started the trading day around 2,500 with a weak tone on the first day of trading after the Lunar New Year holiday on the 31st. The index and other figures are displayed on the index status board in the dealing room at the Hana Bank headquarters in Jung-gu, Seoul. Photo by Yoon Dong-joo

Among the top market capitalization stocks today, Samsung Electronics (-2.42%), Hyundai Motor (-0.24%), POSCO Holdings (-0.57%), LG Electronics (-1.17%), and SK Hynix (-8.14%) are declining. Shinhan Financial Group (3%), KB Financial Group (3.04%), LG Display (1.77%), and Naver (6.13%) are rising.

In particular, semiconductor stocks including SK Hynix sharply dropped. This is attributed to DeepSeek’s launch of the cost-effective AI model ‘R1’. This model has performance comparable to OpenAI’s ‘GPT-4’ but significantly reduces investment costs. As a result, there are expectations that AI model training is possible even with reduced use of high-performance chips like NVIDIA GPUs, causing NVIDIA’s stock price to plunge as much as 17% during the Lunar New Year holiday.

On the other hand, expectations that AI services could expand with cost-effective models led to rises in AI service companies’ stocks. Naver, Kakao (4.9%), and The BizOn (4%) increased.

Samsung Electronics, which announced confirmed earnings today, showed weakness with a 2% drop in early trading. Samsung Electronics reported consolidated Q4 sales and operating profit last year of 75.8 trillion KRW and 6.5 trillion KRW respectively. Most securities firms had initially expected operating profit around 10 trillion KRW but lowered their forecasts to about 7 trillion KRW, and the actual results fell short even of these lowered expectations.

The top market capitalization stocks on the KOSDAQ showed mixed trends. Alteogen rose over 1%, while EcoPro BM declined over 2%. HLB, EcoPro, Rainbow Robotics, and Rigachem Bio are trading around flat.