[Closing Market] KOSPI Falls More Than 3%, Barely Holding 5,500 Level

The KOSPI, KOSDAQ, and won-dollar exchange rate are displayed on the dealing room board at Hana Bank’s head office in Jung-gu, Seoul, on Oct. 22, as the KOSPI recorded a decline of more than 3% again, closing out the regular trading session. (Yonhap) On Oct. 22, the domestic stock market failed to maintain the strong rebound from the previous day and reversed to a sharp decline as a heavy bomb of selling poured out, centered on large-cap semiconductor stocks. The KOSPI and KOSDAQ markets, which had shown rare vitality the day before due to tailwinds from the global stock market and an influx of bargain hunting, returned all their gains in just one day as investor sentiment rapidly cooled. The overall indices slid significantly as profitability concerns in the artificial intelligence (AI) industry and caution over the earnings of major big tech companies coincided with a supply and demand vacuum both domestically and abroad. On this day, the KOSPI index closed trading at 5,533.77, down 201.89 points (3.52%) from the previous trading day. The index opened at 5,670.11, down 65.55 points (1.14%), and showed weakness from the beginning of the session before expanding its decline to be pushed back to the 5,480 level at one point, but barely managed to close at the 5,530 level as some bargain hunting flowed in late in the session. The KOSDAQ market also could not avoid the sluggishness of leading stocks. The KOSDAQ index closed at 764.10, down 28.66 points (3.62%) from the previous session, sinking to near the 760 level. Institutional Selling Offensive Drives Index Decline Looking at the trading trends by investor type, an institutional selling offensive drove the index decline in the benchmark KOSPI market. Institutions alone net sold 462.1 billion won (about $348.96 million), dragging the index down strongly. On the other hand, retail investors stepped up to bargain hunt by net buying 380.2 billion won, and foreign investors also showed a net buying edge of 59.2 billion won, but it was insufficient to defend against the index decline. In the KOSDAQ market, retail investors alone net bought 220.4 billion won, while foreign and institutional investors net sold 122 billion won and 97.7 billion won respectively, fueling the index decline. Two Major Semiconductor Bellwethers Fall Significantly, Dealing a Direct Hit to Index Decline Most of the top market capitalization stocks in the KOSPI market underwent a deep correction. In particular, the two major semiconductor bellwethers that led the market rebound the day before fell significantly, dealing a direct hit to the index decline. Samsung Electronics closed at 214,500 won, down 4.03% from the previous trading day, and SK hynix closed at 1.22 million won, plunging 5.72% and expanding its drop. This is interpreted as the result of heavy profit-taking sales emerging from the previous day’s surge, along with the overvaluation controversy surrounding global semiconductor and AI-related stocks. The flow of other major large-cap stocks outside of semiconductors was also dark. Most of the stocks positioned at the top of the market capitalization ranks, such as secondary batteries, automobiles, and platforms, could not escape weakness. Battery-related stocks including LG Energy Solution, as well as leading automobile stocks like Hyundai Motor and Kia, all closed lower amid an outflow of supply and demand. Specifically, most of the top market capitalization stocks showed a downward trend, including LG Energy Solution (-5.22%), Samsung Electro-Mechanics (-1.20%), Samsung Biologics (-3.67%), Hyundai Motor (-3.07%), Samsung SDI (-7.22%), Doosan Enerbility (-3.31%), HD Hyundai Heavy Industries (-3.91%), Hyundai Mobis (-3.03%), and LG Electronics (-3.39%). SK Group stocks also fell in tandem, including SK Square (-3.59%), the largest shareholder of SK Hynix, as well as SK (-4.25%) and SK Innovation (-8.17%). Top KOSDAQ stocks, including core secondary battery stocks such as Ecopro BM and Ecopro, as well as major pharmaceutical, biotech, and materials, parts, and equipment stocks, also recorded a downward trend in the aftermath of deteriorating overall investor sentiment, making the defense of the KOSDAQ 760 level look precarious. Ecopro BM (-9.66%), Jusung Engineering (-8.93%), and Ecopro (-7.54%). Alteogen, ranked first in market capitalization, dropped 3.75%, and Rainbow Robotics fell 2.41%. Won-Dollar Exchange Rate Closes at 1,324.2 Won, Down 1.0 Won from the Previous Day Based on Daytime Trading Closing Price In the Seoul foreign exchange market, the won-dollar exchange rate showed stability by falling slightly, in contrast to the stock market’s plunge. On this day, the won-dollar exchange rate finished trading at 1,324.2 won at 3:30 p.m., down 1.0 won from the previous day based on the daytime trading closing price, renewing its yearly low for five consecutive trading days. It is at its lowest level in about two years, dropping approximately 15% compared to the peak that soared to the 1,560 won range in June (indicating a rise in the value of the won). Despite the stock market showing a plunge of more than 3%, the exchange rate rather fell slightly, displaying a connection with the temporary weak trend of the dollar. Major cross exchange rates, such as the won-yen arbitrage rate, also recorded limited movements without significant volatility. Experts analyze that the stock market’s plunge on this day is the result of a combination of fatigue from short-term surges and uncertainty in the global AI ecosystem. In particular, as the volatility of the semiconductor sector that supported the upper end of the domestic stock market has expanded, the overall stamina of the index has weakened. Stock market experts are advising, “Rather than expecting a steep recovery of large-cap stocks for the time being, there is a need to take a conservative approach while confirming the contents of global earnings announcements and the direction of foreign supply and demand.”