Doubts over the profitability of global artificial intelligence infrastructure and a high interest rate shock from the United States hit South Korea's stock market at the same time, sending the KOSPI to a close near the 5500 line after the first circuit breaker since July. The index sank to its lowest close since April, leaving investors with a shock that exceeded the steep decline of late July.
The KOSPI closed at 5554.22 on the 15th, down 454.59 points, or 7.57%, from the previous session, according to the Korea Exchange. On a closing basis, it fell below the late-July low of 5593.56 recorded on July 30 and dropped to its lowest level since 5494.78 on April 7. The KOSDAQ also ended at 760.82, down 63.06 points, or 7.65%. During the session, circuit breakers were triggered for the 10th time this year on the KOSPI and for the fifth time on the KOSDAQ.
The KOSPI fell for a seventh consecutive session, the first such streak since Sept. 3-11, 2024, two years and one month earlier. Unlike that episode, when the cumulative decline was just 6.68%, the market shock is far greater this time, with the index down 26% in a short span after having topped the 7000 line. If the KOSPI closes lower again on the 16th, it will face its first eight-session losing streak since Jan. 3-12, 2024.
On the main board, foreign investors alone dumped 3.6243 trillion won ($2.5 billion), weighing down the index. Individuals and institutions bought a net 1.2886 trillion won and 1.6932 trillion won, respectively, but could not stem the selling. On the KOSDAQ, foreign investors bought a net 215.8 billion won, while individuals and institutions sold a net 66.9 billion won and 163 billion won, respectively.
The two largest chipmakers led the slide. Samsung Electronics (005930.KS) closed at 210,000 won, down 9.48%, while SK hynix (000660.KS) tumbled 11.06% to 1,262,000 won. Other major stocks posted double-digit losses, including Samsung Electro-Mechanics (down 15.36%), SK Square (down 10.21%), Hanmi Semiconductor (down 11.63%) and Hyosung Heavy Industries (down 14.71%). Among the largest stocks by market value, only some defensive names seen as havens advanced, including Samsung Biologics (up 5.50%), Yuhan (up 5.09%) and KT&G (up 3.96%).
Analysts said the damage was heavy for a local market with high exposure to semiconductors, as technology-stock woes from the U.S. overnight spilled over to South Korea. The U.S. consumer price index rose 3.7% in September, and surging oil prices pushed the 10-year U.S. Treasury yield as high as 5.3%. CoreWeave bond yields jumped to 15%, stoking concerns over AI-related debt. Gartner's warning of $3.5 trillion in asset impairments and China's ChangXin Memory Technologies' announcement that it had commercialized a new architecture added to worries about the memory chip market.
Brokerages said the KOSPI is approaching the bottom of its historical valuation range. But a more cautious view also prevails: the drop has been deep and sentiment has frozen during the decline that began in July, making a sharp V-shaped rebound unlikely. Samsung Securities on the same day presented 5000 points as a support level for the KOSPI. "The 12-month forward price-earnings ratio is below 4.5 times, and a forward price-to-book ratio of 1 times corresponds to around the 5200 line. The current index level is down 40.4% from the June 19 high, close to the median decline of 43.7% across seven past crisis phases, so further declines below the 5300 line should be limited," said Lee Kyoung-min, an analyst at Daishin Securities. "Rather than hastily averaging down, it is advisable to buy in stages focusing on stocks with attractive dividends, or to act after confirming earnings."
