[Opening Market] KOSPI Falls Below 6,000 Amid Foreign Selloff

On the morning of Oct. 13, the KOSPI index and the won-dollar exchange rate are displayed on an electronic board in the dealing room at the Hana Bank headquarters in Jung-gu, Seoul. (Yonhap) On Tuesday, Oct. 13, the domestic stock market faced an extension of ‘Black Tuesday,’ unable to escape the shock of the record plunge from the previous trading day. Following the weakness of the Philadelphia Semiconductor Index in the U.S. New York stock market the previous day, foreign investors launched a fierce bombardment of selling directed at the top two domestic semiconductor stocks, causing the KOSPI market to draw a steep downward curve from the beginning of the session. Starting at 6,186.08, down 198.16 points (3.10%) from the previous session, the KOSPI index plummeted by more than 386 points compared to the previous trading day’s closing price of 6,384.24 to record the 5,998.16 mark as of 10:30 a.m., breaking below the 6,000 mark which was considered a psychological support level and the last line of defense. It has been about two and a half months since the KOSPI fell below the 6,000 mark during intraday trading on July 31. Following a 3.65% drop the previous day, the index plummeted by more than 6% on this day 13, resulting in a massive drop of 648.48 points (9.79%) over the two days. The downward trend has also continued for the past 5 consecutive trading days. In the KOSPI market, which expanded its steep decline immediately after the opening, a temporary suspension of program trading sell orders (sidecar) was triggered, casting a deep sense of fear across the overall market. The KOSDAQ is also plummeting by more than 4%. As of 11:04 a.m., the KOSDAQ is recording 809.63, down 39.56 points (4.66%) from the previous trading day. The index started at 823.69 and fell to 807.56 during intraday trading, threatening even the 800 mark. Foreigners’ ‘Sell’ vs Individuals and Institutions’ ‘Defend’ Looking at the trading trends by supply and demand entities as of 10:30 a.m., the main culprit behind the index decline is undoubtedly foreign investors. Foreign investors are continuing the dumping trend that started last weekend, recording net sales of about 460 billion won ($343.80 million) to 500 billion won in the KOSPI market. They appear to be aggressively reducing their proportion of domestic large-cap stocks in response to concerns over the slowdown in the global semiconductor industry and exchange rate volatility. Institutional investors stepped in to defend the market and introduced some low-price buying amidst the initial sharp decline, but they showed signs of inadequacy in defending the index, struggling to support the lower bound of the index with net purchases of around 320 billion won. Individual investors, recognizing the sharp drop in the index as a bargain-hunting opportunity, are absorbing the volume by net purchasing massive funds close to about 680 billion won to 700 billion won, but it is a daunting situation to fend off the fierce selling offensive by foreigners. In the KOSDAQ market, individuals are net selling 164.3 billion won. Foreigners and institutions are net buying 137.5 billion won and 30.5 billion won, respectively. Program trading is recording a purchasing advantage of 160.3 billion won. Top Market Cap Large-Cap Stocks Fall Simultaneously Driven by theories of a semiconductor peak, concerns over earnings peak-out, and the aftermath of the U.S. tech stock correction, the top market capitalization large-cap stocks on the KOSPI are simultaneously flashing blue (falling). Samsung Electronics is expanding its decline from the beginning of the session, inheriting the aftershocks of the 4% range plunge the previous day, and is currently trading in the low 240,000 won range. It is recording figures down about 3.8% to 4.2% compared to the previous trading day’s closing price, showing a downward trend of around 10,000 won per share. Despite the announcement of record-breaking earnings, profit-taking and stop-loss selling through foreign windows appear to be concentrated. SK hynix has been directly hit by concerns over intensifying competition in memory semiconductors and theories of pace adjustments in global AI infrastructure investments, sliding to the current 1,530,000 won to 1,540,000 won mark. It completely gave up the 1,600,000 won mark, recording a steep decline of about 4.0% to 4.5% (fluctuating by approximately -60,000 won to -70,000 won) compared to the previous trading day. Top market cap pharmaceutical, biotech, and secondary battery-related stocks such as LG Energy Solution and Samsung Biologics are also unable to overcome the downward pressure on the index, showing a concurrent weakness in the 2% to 4% range. Automotive stocks such as Hyundai Motor are also recording a downward trend of around 3%, compounded by concerns over slowing global demand. Across the overall market, the number of declining stocks is overwhelming the number of rising stocks, and most of the top 10 market cap stocks are undergoing a deep correction. Most of the top market cap stocks are also on a downward trend. Simmtech, EcoPro BM, EO Technics, EcoPro, Rainbow Robotics, Alteogen, and Wonik IPS are plummeting in the 5% to 9% range. Won/Dollar Exchange Rate Battles Around the 1,338 Won Mark, Slightly Up from the Previous Day Coupled with the panic market conditions in the stock market on October 13, the foreign exchange market is also showing high volatility. As of 10:30 a.m., the won-dollar exchange rate is battling around the 1,338 won mark, fluctuating between a slight increase and a mixed trend in the flat zone compared to the previous trading day’s daytime closing price of 1,335.1 won. As the scale of foreign capital outflow in the stock market grows, the demand for the dollar is being stimulated, but both the upper and lower bounds of the exchange rate appear to be limited as it coincides with a temporary breather for the dollar in the global foreign exchange market. However, if the steep decline in the stock market does not calm down, the possibility cannot be ruled out that the exchange rate will come under additional pressure as the demand for foreign reverse remittances and the preference for safe assets are aggravated. Experts are diagnosing the current correction in the domestic stock market not merely as short-term noise, but as the result of a complex interaction between a supply and demand vacuum in the global semiconductor value chain and the outflow of foreign passive funds. In a phase where even the 6,000 mark is threatened, the upward momentum of the stock market going forward is projected to depend on whether the foreign selling trend calms down, the upcoming U.S. Consumer Price Index (CPI) results, and the recovery of reliability in the third-quarter earnings guidance of major domestic companies. Investors are at a point where they must calmly monitor the market’s trend reversal signals along with risk management, rather than engaging in excessive leveraged investments amidst the severely volatile market conditions.