(Seoul = Yonhap News) Reporter Hwang Cheol-hwan = As concerns over the slowdown in investment in artificial intelligence (AI) infrastructure have reignited, KOSPI continues its 'wingless fall', falling more than 1,000 points in just 5 trading days.
According to the Korea Exchange and Yonhap Infomax, a financial information service provider, on the 13th, as of 11:08 am on this day, KOSPI was at 5,989.18, down 6.19% from the previous day.
The index, which started at 6,186.08, down 3.10%, once fell to 5,950.00 (-6.80%).
As a result, a sell sidecar was activated in the stock market, and the program buy call was suspended for 5 minutes.
KOSPI, which closed at 7,003.74 on the 2nd and recovered '7,000 pi' as the closing price for the first time since late September, has been falling for 5 consecutive trading days since then.
The cumulative drop during this period amounts to 1,014.56 points (14.49%). As the index, which was at the 7,000 level, suddenly fell below the 6,000 level, the KOSPI market capitalization also decreased by more than 800 trillion won, falling below 500 trillion won.
There was no decline for five consecutive trading days on 'Liberation Day' (April 2, 2025), when US President Donald Trump imposed high reciprocal tariffs on the world, in March of this year, immediately after the outbreak of the US-Iran war, and in July of this year, when a sharp decline occurred due to the supply and demand shock caused by the global semiconductor adjustment and the launch of leveraged products for single stocks of Samchun and Nix.
In particular, in this case, it is noteworthy that the index drop appears to be increasing -0.89% on the 6th, -1.98% on the 7th, -2.62% on the 8th, and -3.65% on the 12th.
KOSPI, which once soared to 9,385.59 during the trading session on June 19, fell to 5,262.77 during the trading session on July 29, but after recovering with the end of the global semiconductor adjustment, it fluctuated around the 7,000 line, showing a trading range.
However, after the National Foundation Day holiday (3rd to 5th), the domestic stock market showed a sharp decline in momentum.
Currently, the KOSPI index has fallen to a sharp decline level in July and August.
KOSDAQ is also recording a plunge of around 5% at this time.
The main background is the rise in U.S. Treasury yields, the burden of the strong won, and the sell-on (price decline amid good news) following Samsung Electronics' [005930] third quarter earnings announcement.
Samsung Electronics' third quarter operating profit, announced on the 8th, was KRW 107.4 trillion, an increase of 782.5% from the same period last year, breaking the company's highest quarterly performance ever. This is the first time that a Korean company has exceeded 100 trillion won in quarterly operating profit, and the operating profit ratio also set an all-time high of 55.1%.
However, Samsung Electronics is undergoing a major adjustment, starting with a 2.42% plunge on the day of the earnings announcement, followed by a 4.39% plunge on the 12th and 7.49% on the 13th. Other semiconductor-related stocks, such as SK Hynix [000660], also show the same trend.
The trigger was an incident caused by a foreign media report earlier this month that OpenAI's annualized sales as of the end of September were only $50 billion, which was lower than market expectations ($68 to $70 billion).
Concerns that AI-related demand had plummeted were dispelled as it was revealed that it was only a difference in accounting sales calculation method and not an actual sales decrease, but it stimulated concerns about the memory industry peaking out (passing its peak), which had subsided for a while, and the desire to take profits.
Over the weekend, China's Changshin Memory (CXMT) announced that it had made new progress in DRAM memory technology and that it plans to introduce next-generation server products using this technology within this year, which also acted as a negative for the stock prices of the three memory companies, including Samsung Electronics, SK Hynix, and Micron.
Broadcom CEO Hok Thanh's warning that financing, not a shortage of semiconductors or power, may be the biggest limiting factor in the AI boom is also cited as background.
At an event held in Singapore the previous day, he said, "Bottlenecks have occurred several times over the past two years, but we have overcome them each time. The current memory shortage may be different a year from now," and added, "I think the biggest limiting factor may be capital."
These remarks raised concerns that the global high interest rate trend, including rising bond yields, could slow down investment in infrastructure such as AI data centers.
Seo Sang-young, managing director of Mirae Asset Securities, said, "Today's plunge in Asian stock markets, including Korea and Japan, and the decline in U.S. index futures are believed to be due to a combination of concerns about the profitability of AI investment and a reduction in the proportion of global risk assets."
He analyzed, "Remarks by the CEOs of Broadcom and Intel regarding the burden of capital raising, and the withdrawal of the IPO of Australian AI data center company Permus stimulated doubts about the sustainability of AI investment, and the fact that BlackRock downgraded its investment opinion on US stocks from overweight to neutral due to high government bond yields also became a burden."
At the same time, Samsung Electronics' stock repurchase for employee stock compensation purposes has virtually ended, and SK Hynix's stock repurchase cancellation has also reached its final stages, which are cited as factors that have significantly lowered the defense power of the domestic stock market.
In the aftermath of the July plunge, many individual investors are in the loss zone, institutions including pension funds have limited purchasing power, and the domestic stock market has suffered from a supply and demand gap since then.
Fortunately, large-scale net purchases by other corporations, thanks to share purchases by Samsung Electronics and SK Hynix, have been supporting the bottom of the KOSPI, but the intensity of purchases has weakened significantly this month.
As of this time, foreigners alone are net selling 2.2 trillion won in the stock market. Individuals are net buying 1.1877 trillion won, and institutions are net buying 792.4 billion won.
Other corporations also have a purchasing advantage, but the net purchase size is only 215.3 billion won.
Heo Jae-hwan, a researcher at Eugene Investment & Securities, pointed out, “Comparing the market capitalizations of Taiwan and Korea, the intensity of foreign selling in the domestic stock market is more than three times that of Taiwan.”
He pointed out that considering that the Taiwanese stock index's growth rate this year exceeded 70% and surpassed that of the KOSPI (51%, based on the previous day's closing price), it would be excessive to think that it was simply adjusting the proportion because the stock price rose significantly.
Researcher Heo said, “The key is not the foreign selling itself, but whether there is a domestic stock demand base that can offset it. For example, unlike the Bank of Korea, which raised interest rates twice this year, Taiwan did not raise interest rates, and the economic growth rate is 11.5%, but inflation is in the low 2% range, so it is easy for Taiwanese households to maintain a steady interest in the stock market.”
In the end, because of weak supply and demand, the domestic stock market is greatly shaken every time a property comes up for sale, mainly to foreigners.
However, Researcher Heo said, "Foreign investors' shareholding in domestic semiconductors is 47.2%, approaching the -1 standard deviation level (47%) since 2000, and the rise in U.S. interest rates has been slowing since last week," and added, "It is difficult to avoid all foreign selling due to the highly volatile nature of the domestic stock market, but it is expected that there will come a point in the near future when it stops getting more rough."
