[Opening Market] Korean Stocks Plunge as U.S. Inflation, AI Fears Trigger 'Black Thursday'

Screens at Hana Bank’s headquarters dealing room in Jung-gu, Seoul, display the Kospi index and the share prices of Samsung Electronics and SK hynix on Oct. 15. The Kospi opened at 5,673.01, down 335.8 points, or 5.59%, from the previous close of 6,008.81. South Korea’s stock markets suffered a “Black Thursday” rout amid a combination of adverse factors, including a U.S. inflation shock and mounting concerns over the profitability of the artificial intelligence (AI) industry. As the Kospi and Kosdaq indices plunged 5–6% in early trading on Oct. 15, sell-side sidecars, or temporary suspensions of program sell orders triggered by sharp market declines, were activated in both markets, reflecting widespread investor anxiety. A sell-side sidecar was triggered on the main Kospi market at 9:07 a.m., followed by a five-minute suspension of program trading on the Kosdaq market at 9:12 a.m. It marked the first time sell-side sidecars had been activated in both markets on the same day in approximately 11 weeks, since July 29. The Kospi fell as low as 5,615.72 during intraday trading, putting the 5,600-point level under pressure. Semiconductor Blue Chips Plunge Across the Board Major semiconductor stocks led the market decline. Samsung Electronics was trading more than 7% lower at around 214,000 won, or approximately $158.53, per share, while SK hynix plunged roughly 9%, retreating to the 1.28 million won level. SK Square and Samsung Electro-Mechanics also posted steep declines of approximately 9% and 12%, respectively, driving the broader index lower. The selloff was largely driven by heavy selling in semiconductor and technology stocks on Wall Street overnight. The Philadelphia Semiconductor Index fell 4.30%, marking its sixth consecutive session of losses, while Nvidia dropped 3.16%, Micron declined 4.08% and AMD slid 5.73%. In particular, SK hynix’s American depositary receipts (ADRs) fell below their initial offering price, further dampening investor sentiment. Inflation Data Tops Forecasts as AI Profitability Doubts Mount Market experts cited renewed concerns over potential interest rate hikes as a key driver of the decline after the U.S. September Consumer Price Index (CPI) rose 3.7%, exceeding the market forecast of 3.6%. Core CPI also came in above expectations, indicating persistent inflationary pressure. International crude oil prices also climbed above $100 per barrel, adding to inflation concerns. Skepticism over AI infrastructure investment also weighed on the market. Research firms including Gartner issued negative outlooks, suggesting that massive capital expenditures might generate less revenue than expected. Shares of AI-related companies that have expanded data center capacity through debt financing plunged, with CoreWeave falling 15.46% and Oracle dropping 8.83%, as the selling pressure spread to related South Korean stocks. Foreign Selling Continues as Exchange Rate Climbs Foreign investor selling was particularly pronounced. Foreign investors recorded net sales for eight consecutive trading sessions on the main Kospi market, selling more than 900 billion won worth of shares during the morning session alone. Institutional and individual investors stepped in to buy shares at lower prices in an effort to support the index, but their purchases proved insufficient to offset the downward pressure. In the Seoul foreign exchange market, the won-dollar exchange rate was trading at around 1,340 won per dollar, up from the previous session. Dollar strength following the U.S. inflation shock and increased risk aversion pushed the exchange rate higher, although further gains were limited by dollar selling from exporters. Investors are watching whether TSMC’s earnings announcement, scheduled for later in the session, could help narrow losses among semiconductor stocks.