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Falling Trading Value Is Shaking Stock Prices: From 106 Trillion Won to 38 Trillion
In May 2026, average daily trading value on South Korea’s stock market surged to 106.2 trillion won. But by the fourth week of October, it had fallen to around 38.7 trillion won. In just a few months, the amount of money moving the market had shrunk dramatically.
The decline in trading value does not simply mean that investors have lost interest. When market liquidity thins, even small news events or limited orders can create conditions in which stock prices swing more sharply than usual.
Why Does Lower Trading Value Increase Price Volatility?
Trading value indicates how much buying and selling demand has built up in the market. When trading is active, buying demand is there to absorb shares put up for sale by some investors. But when trading slows, the balance between buyers and sellers can easily break down.
For example, news about clinical trial results, fundraising, a tender offer, or a major contract can send a stock soaring on less buying demand than usual. Conversely, when bad news breaks, a lack of buyers to absorb the selling can deepen the decline.
In a market with low liquidity, price swings are often determined less by the scale of the news than by the balance of buy and sell orders available to respond to it.
The Breadth of a Rally Matters More Than an Index Rebound
The KOSPI or KOSDAQ can rebound even as trading value declines. But a rally unsupported by trading activity may be the result of buying concentrated in just a few large-cap stocks or a particular theme.
To assess how credible a market rebound is, it is worth watching these trends together:
- Is trading value rising along with the index?
- Is the number of advancing stocks increasing broadly, and outpacing decliners?
- Are foreign and institutional investors continuing to post net purchases?
- Is buying spreading beyond large-cap stocks to small and mid-cap companies with earnings fundamentals?
- After a sharp rise, are stocks maintaining their trading volume and earnings outlook even after the news breaks?
In particular, when trading value is falling, short-term market darlings can look even more attractive. But if a stock has risen on a single piece of good news, it can quickly give back those gains when the news lacks staying power or is unlikely to translate into earnings.
A Market Shaken by Small Headlines: What Investors Should Watch
When the market has cooled, as it has now, it is more important to look for stocks with a reason to attract fresh capital than simply to seek out stocks that have fallen sharply. Investors need to distinguish between a decline driven by a temporary withdrawal of buying interest and one caused by structural problems such as a weakening earnings outlook or loss of competitiveness.
Before investing, it is better to ask these questions before focusing on the news itself:
- Can the announced good news actually lead to higher revenue and earnings?
- Are the company’s cash flow and financial position stable?
- Are earnings forecasts being revised upward?
- Is the increase in trading volume lasting beyond a one-day reaction?
- Is trading value across the broader market also showing signs of recovery?
If the rally in the era of 106 trillion won in trading value was driven by broad inflows of capital, gains in a market trading in the 38-trillion-won range may be far more selective. This is a time to look beyond short-term price moves and assess both the recovery in liquidity and the sustainability of earnings.
AI and Semiconductor Stocks: Why Strong Earnings Alone Aren’t Enough
Samsung Electronics and SK hynix are expected to post earnings near record highs, yet their share prices aren’t rising as easily as investors might expect. The reason is simple: the market has already priced in much of the expected profit—and is now asking a tougher question: How long can those profits last?
The expansion of AI investment is a key driver of demand for high-bandwidth memory (HBM) and other high-performance memory. But investors want confidence that “AI demand will keep growing” and “memory prices will continue to rise.” If strong results are seen as a temporary rebound in the cycle, shares could even pull back immediately after earnings are announced.
The Market Cares More About Next Quarter’s Outlook Than Current Profits
Semiconductor stocks are more sensitive to future guidance than to earnings already reported. Even if revenue and operating profit are up, a weaker outlook for memory prices next quarter—or an aggressive expansion in capital spending—could revive fears of oversupply.
When earnings are announced, investors should look closely at:
- Orders and shipment outlook for AI memory, including HBM
- Whether gains in DRAM and NAND prices can continue
- Inventory levels and the pace of customer orders
- Planned capital spending and how quickly supply will grow
- The possibility of a slowdown in AI data-center investment
Ultimately, semiconductor stocks are driven less by “how much did the company earn this quarter?” than by “can it earn at the same level next year?”
Shareholder Returns Are Also Key to a Stock’s Revaluation
For strong earnings to translate into share-price gains, it also matters how those profits are returned to shareholders. Higher dividends, share buybacks and cancellations, and a clear capital-allocation plan signal that corporate profits will translate into shareholder value.
By contrast, if a company has plenty of cash but falls short of expectations on shareholder returns, the market may apply a discount. Large semiconductor companies generate substantial cash flow, so investors hold them to high standards not only for investment and financial stability, but also for rewarding shareholders.
Strong earnings are only the starting point. A stock can be revalued when sustainable growth prospects are paired with a credible shareholder-return policy.
So when assessing AI and semiconductor stocks, look beyond the earnings headlines. Consider how long favorable industry conditions can last, how supply is set to evolve, and what the company’s cash flow and shareholder-return plans look like. The market wants more than a one-off record quarter: it wants repeatable profits—and a clear promise to share them with shareholders.
How Interest Rates, Oil Prices, and the FOMC Can Turn the Market Around
As debate continues over the profitability of AI investments, uncertainty in the Middle East, swings in global oil prices, and the U.S. Federal Open Market Committee (FOMC) can all converge to make it difficult for markets to move in one clear direction. This is especially true in markets with heavy exposure to growth and technology stocks, where even a small shift in interest-rate expectations can quickly change the mood.
The key is simple: Expectations of rate cuts tend to support stock prices, but they can fade as soon as rising oil prices stoke inflation concerns.
Why Rate-Cut Expectations Lift Growth Stocks
When interest rates fall, the present value of future earnings rises. This creates a particularly favorable environment for AI, semiconductor, and platform companies, whose valuations depend more on future growth potential than on current earnings.
When investors expect rate cuts, the pattern is generally familiar:
- Less valuation pressure on technology and growth stocks
- A recovery in appetite for riskier assets
- Expectations of lower financing costs for companies
- Strength in stocks whose value depends heavily on future earnings
But markets are more sensitive to why rates are being cut than to whether a cut is possible. A preemptive cut amid a soft landing may be positive. But if cuts begin because of recession fears, deteriorating earnings outlooks may become a much bigger concern.
Rising Oil Prices Can Shake Rate-Cut Expectations
When global oil prices rise, transportation costs and input costs climb, potentially putting upward pressure on consumer prices. If inflation becomes a concern again, the Fed may find it harder to move quickly on rate cuts.
In other words, if worsening tensions in the Middle East lead to a sharp rise in oil prices, markets may follow this chain of events:
Geopolitical instability → Rising oil prices → Greater inflationary pressure → Fading rate-cut expectations → Valuation pressure on growth stocks
In this environment, stocks can fall even after strong earnings reports. That is because markets may focus first on rising discount rates, higher costs, and the risk of weaker consumer spending—not on current earnings.
At FOMC Meetings, Watch the Tone—not Just the Rate Decision
It is not enough to look only at whether the FOMC holds or cuts its benchmark interest rate. If the decision is already expected, markets will focus on the Fed’s economic outlook and what its policymakers signal about the path ahead.
In particular, it is worth watching for:
- The Fed’s confidence in bringing inflation to its target
- Clues about the number and pace of future rate cuts
- Its assessment of the labor market and slowing consumer spending
- Any comments on how rising oil prices could affect inflation
- Changes to its forecasts for economic growth and inflation
For example, even if the Fed holds rates steady, markets may take comfort if it signals that it could consider easing policy as long as inflation continues to cool. On the other hand, if the Fed indicates that it plans to maintain a restrictive stance for longer because of oil prices and inflation, volatility in growth stocks is likely to increase.
In a Volatile Market, Don’t Rely on Any One Indicator
In 2026, expectations for AI-driven growth and macroeconomic uncertainty are both shaping the market. Even strong semiconductor earnings may not prevent rate-cut expectations from weakening if oil prices surge. And even if interest-rate expectations improve, stocks tied to AI may still come under pressure if doubts about the profitability of AI investments intensify.
Investors should therefore connect the dots between interest rates, oil prices, and the FOMC rather than viewing them in isolation. Whether rate-cut expectations hold, whether oil prices are high enough to fuel inflation, and whether the Fed validates the market’s expectations will be key factors in determining the near-term direction of stock prices.
Stocks Surging on News: Questions to Ask Before Jumping In
Stocks that climbed 26.7% in a single day after clinical trial results were released, hit the daily price limit on news of an investment, or surged on expectations of a tender offer. Powerful news can quickly grab investors’ attention and move share prices.
But good news does not automatically mean a company is worth more. Markets price in expectations first, then look to see whether actual revenue, earnings, and cash flow can justify them. If the headlines fail to translate into results, a rally can fade faster than expected.
Check Whether the News Is a “Plan” or a “Confirmed Result”
Even news that sounds equally positive can carry very different weight in the market. For example, a positive clinical trial announcement may still be a long way from actual regulatory approval and the start of sales, with more time, costs, and uncertainty in between.
The same goes for fundraising. Raising capital can be a positive, but if it involves a new share issuance, existing shareholders’ ownership stakes may be diluted.
When a stock-moving headline breaks, it helps to first check:
- Is the announcement about a signed contract, an expression of investment interest, or a proposal still under review?
- Have the contract amount, duration, and termination terms been clearly disclosed?
- How does the company plan to use the funds it raises?
- When will the revenue be recognized, and when is it expected to contribute to earnings?
- Is there a possibility of additional fundraising or share issuance?
Determine Whether Good News Will Translate Into Results
What matters more than the scale of the news is whether the earnings are sustainable. Even a major order may do little to improve a company’s value if it has low margins or generates only one-off revenue. By contrast, a seemingly smaller development may matter more if it leads to recurring revenue and higher margins.
Expectations can be priced in quickly, especially in biotech, entertainment, and emerging technology stocks. Be sure to consider the following as well:
- How large is the expected revenue compared with the company’s existing revenue?
- Is it likely to improve operating profit and cash flow?
- Does the company have technology or a market position that sets it apart from competitors?
- Is this a one-off event, or part of a repeatable business model?
- Has the company delivered on the targets it has set in the past?
Read the Terms of Tender Offer and M&A News
Expectations of a tender offer can create a substantial premium in a stock’s price. But a “possibility under consideration” and an “official tender offer announcement” are very different stages. The outcome can depend on the buyer’s financial capacity, the offer price, the target ownership stake, and the conditions for completing the deal.
When reacting to tender offer news, don’t look only at the premium over the reference share price. Check the difference between the actual offer price and the current market price, too. If the stock has already surged on expectations, the price could fall sharply if the deal falls through.
After a Surge, Look at Trading Volume and Valuation Together
A spike in trading volume right after news breaks may signal growing investor interest. But when overall trading value is down, even modest buying or selling pressure can move a stock excessively, increasing the risk of chasing the rally.
The sharper the surge, the more important it is to ask:
“If this news had never come out, would I still have a reason to buy this company at today’s price?”
Check the P/E ratio, P/B ratio, growth rate, debt levels, and free cash flow, and compare them with those of similar companies. The goal is to distinguish whether the news has changed the company’s long-term value or merely fueled short-term investor sentiment.
Ultimately, successful investing in stocks that surge on news depends less on buying quickly than on calculating the gap between expectations and reality. Look beyond the headline: first examine the contract terms, when the news is likely to show up in results, and the level of expectations the higher share price will have to live up to.
How to Identify Businesses Built to Last Among Stocks That Have Fallen
A steep drop in a stock’s price does not automatically make it a buying opportunity. First, you need to determine whether the decline was caused by a short-term setback or by weakening competitiveness and earnings power. In volatile markets, the key question is not how far a stock has fallen, but why it fell and whether the company has the strength to recover.
First, determine whether the cause of the decline is temporary or structural
Temporary setbacks can sometimes prove to be an overreaction by the market. If a decline stems from a short-term rise in raw material prices, exchange-rate fluctuations, one-off expenses, or broad risk aversion, the company’s underlying value may not have been significantly impaired.
By contrast, the following factors may signal a structural decline:
- Falling demand for core products and loss of market share
- Weaker technology or price competitiveness than rivals
- Repeated losses and rising debt
- Customer attrition, fewer orders, or mounting regulatory risks
- Downgraded earnings forecasts due to slowing industry growth
If a stock has fallen after an earnings announcement, pay particular attention not only to reported results, but to changes in next-quarter guidance and full-year earnings forecasts. Markets tend to price in future profitability before they focus on past performance.
Earnings and cash flow are the foundation for a recovery
Even when a company’s operating profit is rising, caution is warranted if that profit is not translating into cash. A sharp increase in accounts receivable or mounting inventory can leave a company with weak cash flow despite reporting accounting profits.
You can assess a company’s resilience by asking:
- Are revenue and operating profit growing steadily?
- Is cash flow from operating activities consistently positive?
- Does the company have enough cash and earnings to cover its interest expenses?
- Are inventory and accounts receivable growing excessively?
- Is major capital spending likely to translate into future earnings?
A company whose cash flow continues to deteriorate may not be a suitable long-term investment, even if its stock rebounds in the short term. Conversely, if earnings have temporarily declined because of a downturn in the industry, but the company has a sound balance sheet and continues to generate cash, its recovery potential may be worth considering.
Don’t judge a stock to be undervalued based on a low P/E alone
A stock with a low P/E may look cheap, but its valuation may reflect the market’s expectation of declining future earnings. To avoid falling into a “value trap,” look beyond the P/E and consider ROE, debt levels, free cash flow, and earnings growth as well.
Be especially cautious of combinations like these:
- Low P/E + persistent earnings declines
- Low P/B + low ROE
- High dividend yield + insufficient capacity to sustain the dividend
- Falling share price + the possibility of a large share issuance
- Weak results + rising debt
On the other hand, a company can sustain a market premium even at a high valuation if it has strong earnings growth, a clear competitive edge, and healthy cash flow. What matters is not any single number, but the balance between price and growth prospects.
Shareholder returns can signal a company’s confidence
Higher dividends, share buybacks, and share cancellations can be more than one-off events: they may signal that a company is confident in its financial strength and future cash flows. Companies that continue to return capital to shareholders at a measured pace—even when growth investment is needed—are worth watching from a long-term investment perspective.
Still, don’t base your judgment solely on a one-time special dividend or a short-term buyback announcement. Make sure the company can sustain shareholder returns without compromising investment or financial stability.
Ultimately, the stocks to choose in volatile markets are not simply those that have fallen the most. They are companies with earnings forecasts that hold up, healthy cash flow, a competitive edge, and the capacity to return capital to shareholders. Making a habit of looking first for businesses built to last—not just stocks at lower prices—can guide better long-term investment decisions.
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