The Market That Record Earnings Can't Speak To
It's the fifth day. KOSPI closed at 5,617, down 46 points, or 0.81%, from yesterday's 5,663. At one point during the session it rebounded more than 4%, but lost strength toward the afternoon and eventually turned negative. Five consecutive days — but the pace of the crash has clearly slowed. From a 10%-range crash to 5%, and now to under 1%. Is the market finding a bottom, or is this a breather before the next plunge? No one can say.
The real event today is not KOSPI but Samsung Electronics' earnings. Q2 revenue of 171.5 trillion won, operating profit of 89.5 trillion won. Up 1,813% year-on-year. Net profit of 71.6 trillion won, up 1,300%. The figure of 89.5 trillion won in quarterly operating profit is the largest single-quarter performance among global semiconductor manufacturers. When SK Hynix announced revenue of 79.3 trillion won and operating profit of 60.5 trillion won two days ago, I wrote, "Record-breaking performance, record-breaking crash." Samsung came out with even bigger numbers.
The stock surged more than 7% during the session but closed up 3.72% in the afternoon. Compared with before the earnings announcement, it's a rebound, but it's paltry for the market's reaction to a number like 89.5 trillion won. It's evidence that four days of accumulated fear won't disappear in a single day.
During the conference call, Samsung's management gave several important signals. HBM4 began mass production and commercial shipment in February, and HBM4 revenue in Q3 is expected to more than triple quarter-over-quarter. HBM4E 12-layer samples have already been delivered to major customers. And decisively, they said that even just looking at the order backlog for 2027, the supply shortage will deepen further compared with 2026. In foundry, they secured an order for a 2nm HPC chip from a major American customer, and will begin mass production of the second-generation 2nm mobile chip in the second half of the year.
In short, the numbers and outlook Samsung disclosed say that the AI semiconductor supercycle is not ending but just getting into full swing. Yet KOSPI is hovering around the 5,600 level.
How are we to understand this divergence?
One explanation is that the market's time horizon and the real economy's time horizon are completely out of sync. Samsung's 89.5 trillion is money already earned in April–June, and the 2027 supply shortage forecast is a story six to eighteen months away. But the market reacts to immediate fear. The question the market asks is not "How much did Samsung earn?" but "If I hold Samsung shares for the next three months, will I lose money?" The gap between these two questions swallowed the 89.5 trillion won of operating profit.
The second explanation is structural. The combined weight of Samsung Electronics and SK Hynix in the Korean stock market's total market capitalization has now exceeded 40%. No matter how good the two companies' earnings are, they are insufficient to calm the market's overall fear. Rather, a paradox emerges: the better the two companies' earnings, the clearer the Korean economy's dependence on a single industry, and that dependence's vulnerability produces greater fear. This inverted situation, where good earnings are read as evidence of structural weakness — this is the dialectic of comprador monopoly capitalism.
This morning, financial authorities announced additional regulations on leveraged ETFs. It's a response that came only after retail investors poured trillions of won into single-stock leveraged ETFs over the past four days and a large portion of that money evaporated. The authorities are always like that. They talk first and move after the ants are dead.
Around midnight last night, I had a conversation with a comrade on a webchat about the "satisfied ones." I already recorded this conversation in yesterday's diary, but read again in the context of today's Samsung earnings announcement, it has a different meaning. The satisfied ones — people who are indifferent to politics and don't care as long as the system doesn't interfere with their lives — how would they respond to Samsung's earnings? Probably most wouldn't respond. Whether Samsung's operating profit is 89 trillion or 8.9 trillion, it has no direct relation to their salaries and rent.
But indirectly, there is a relation. To whom does the near-150 trillion won in quarterly operating profit earned by Samsung and SK Hynix go? To shareholders, to executives, and some to R&D and facility investment. The reason that money doesn't flow into wages for workers at partner companies, conversion of non-regular workers to regular positions, or funding for public housing to resolve housing instability is not because Samsung's earnings are bad. Even when earnings are good, it doesn't flow. Dividends, share buybacks, and facility investment absorb everything. This very structure is the reality just beneath the thin membrane of the satisfied ones' "satisfaction."
The Fed kept rates on hold. 4.25–4.50% per annum. The market is already pricing in a September cut. Japan's Nikkei and Hong Kong's Hang Seng rose in the 2% range. Only Korea is still in the red. This selective crash — not Asia as a whole, but only Korea; not the entire tech sector, but only KOSPI — tells us something clearly. What is moving the Korean market now is not global macro but the structural factors of the Korean economy, which are having a greater effect.
If there is a lesson from the five-day crash, it is this. SK Hynix's record-breaking earnings could not prevent a 12.63% crash. Samsung Electronics' 1,813% profit increase could not even put KOSPI above the 5,700 line. The market does not believe in earnings. The market believes only in the market. And what the market fears is not a slowdown in semiconductor demand, not China's pursuit, not the collapse of the AI bubble — but the possibility itself that all of them could burst simultaneously. That possibility is embedded in the structure of Korean comprador monopoly capitalism.
The real event today is not KOSPI but Samsung Electronics' earnings. Q2 revenue of 171.5 trillion won, operating profit of 89.5 trillion won. Up 1,813% year-on-year. Net profit of 71.6 trillion won, up 1,300%. The figure of 89.5 trillion won in quarterly operating profit is the largest single-quarter performance among global semiconductor manufacturers. When SK Hynix announced revenue of 79.3 trillion won and operating profit of 60.5 trillion won two days ago, I wrote, "Record-breaking performance, record-breaking crash." Samsung came out with even bigger numbers.
The stock surged more than 7% during the session but closed up 3.72% in the afternoon. Compared with before the earnings announcement, it's a rebound, but it's paltry for the market's reaction to a number like 89.5 trillion won. It's evidence that four days of accumulated fear won't disappear in a single day.
During the conference call, Samsung's management gave several important signals. HBM4 began mass production and commercial shipment in February, and HBM4 revenue in Q3 is expected to more than triple quarter-over-quarter. HBM4E 12-layer samples have already been delivered to major customers. And decisively, they said that even just looking at the order backlog for 2027, the supply shortage will deepen further compared with 2026. In foundry, they secured an order for a 2nm HPC chip from a major American customer, and will begin mass production of the second-generation 2nm mobile chip in the second half of the year.
In short, the numbers and outlook Samsung disclosed say that the AI semiconductor supercycle is not ending but just getting into full swing. Yet KOSPI is hovering around the 5,600 level.
How are we to understand this divergence?
One explanation is that the market's time horizon and the real economy's time horizon are completely out of sync. Samsung's 89.5 trillion is money already earned in April–June, and the 2027 supply shortage forecast is a story six to eighteen months away. But the market reacts to immediate fear. The question the market asks is not "How much did Samsung earn?" but "If I hold Samsung shares for the next three months, will I lose money?" The gap between these two questions swallowed the 89.5 trillion won of operating profit.
The second explanation is structural. The combined weight of Samsung Electronics and SK Hynix in the Korean stock market's total market capitalization has now exceeded 40%. No matter how good the two companies' earnings are, they are insufficient to calm the market's overall fear. Rather, a paradox emerges: the better the two companies' earnings, the clearer the Korean economy's dependence on a single industry, and that dependence's vulnerability produces greater fear. This inverted situation, where good earnings are read as evidence of structural weakness — this is the dialectic of comprador monopoly capitalism.
This morning, financial authorities announced additional regulations on leveraged ETFs. It's a response that came only after retail investors poured trillions of won into single-stock leveraged ETFs over the past four days and a large portion of that money evaporated. The authorities are always like that. They talk first and move after the ants are dead.
Around midnight last night, I had a conversation with a comrade on a webchat about the "satisfied ones." I already recorded this conversation in yesterday's diary, but read again in the context of today's Samsung earnings announcement, it has a different meaning. The satisfied ones — people who are indifferent to politics and don't care as long as the system doesn't interfere with their lives — how would they respond to Samsung's earnings? Probably most wouldn't respond. Whether Samsung's operating profit is 89 trillion or 8.9 trillion, it has no direct relation to their salaries and rent.
But indirectly, there is a relation. To whom does the near-150 trillion won in quarterly operating profit earned by Samsung and SK Hynix go? To shareholders, to executives, and some to R&D and facility investment. The reason that money doesn't flow into wages for workers at partner companies, conversion of non-regular workers to regular positions, or funding for public housing to resolve housing instability is not because Samsung's earnings are bad. Even when earnings are good, it doesn't flow. Dividends, share buybacks, and facility investment absorb everything. This very structure is the reality just beneath the thin membrane of the satisfied ones' "satisfaction."
The Fed kept rates on hold. 4.25–4.50% per annum. The market is already pricing in a September cut. Japan's Nikkei and Hong Kong's Hang Seng rose in the 2% range. Only Korea is still in the red. This selective crash — not Asia as a whole, but only Korea; not the entire tech sector, but only KOSPI — tells us something clearly. What is moving the Korean market now is not global macro but the structural factors of the Korean economy, which are having a greater effect.
If there is a lesson from the five-day crash, it is this. SK Hynix's record-breaking earnings could not prevent a 12.63% crash. Samsung Electronics' 1,813% profit increase could not even put KOSPI above the 5,700 line. The market does not believe in earnings. The market believes only in the market. And what the market fears is not a slowdown in semiconductor demand, not China's pursuit, not the collapse of the AI bubble — but the possibility itself that all of them could burst simultaneously. That possibility is embedded in the structure of Korean comprador monopoly capitalism.