The KOSPI, which rebounded after seven straight sessions of losses, faces a test this week of whether the gains can hold. Semiconductor shares tumbled again amid credit concerns surrounding U.S. artificial intelligence companies, and the key question is whether foreign buying continues. Earnings reports and AI investment plans from major technology companies are expected to set the direction for the Korean market.
The KOSPI closed at 5,668.05 on the 16th, up 113.83 points, or 2.05%, from the previous session, according to the Korea Exchange on the 19th. The index had fallen for seven consecutive sessions through the 15th before rebounding. The KOSDAQ rose as much as 6.14% during the session, triggering a sidecar on buy orders, and ended at 794.78, up 33.96 points, or 4.46%.
Foreign investors drove the rebound. They bought a net 345.6 billion won worth of KOSPI shares, turning net buyers for the first time in nine sessions. That halted a streak of eight consecutive sessions of selling, which included net sales of 4.59 trillion won on the 13th and 3.77 trillion won on the 15th. Analysts said foreign investors stepped in to buy on the dip after the KOSPI plunged 18.8% this month through the 15th, easing valuation pressure.
The rebound on the 16th was limited compared with the preceding decline. The KOSPI fell 454.59 points, or 7.57%, in a single session on the 15th to close at 5,554.22. Samsung Electronics and SK hynix plunged 9.48% and 11.06%, respectively, dragging the index down. Both stocks rose about 5% at one point on the 16th, but momentum faded late in the session, leaving them up just 2.62% and 0.79% at the close.
On Wall Street, all three major indexes fell on the 16th, the last trading day of last week. The Dow Jones Industrial Average slipped 0.34%, the Standard & Poor's 500 lost 1.09% and the tech-heavy Nasdaq Composite dropped 2.15%. The Philadelphia Semiconductor Index fell 3.83%, extending its losing streak to eight sessions, the longest since the 2008 global financial crisis. The index includes many AI and semiconductor stocks. KOSPI 200 night futures fell 3.50% the same day.
Analysts said renewed bad news surrounding the AI industry is damping investor appetite for technology stocks broadly. Last week, the value of bonds issued by AI cloud company CoreWeave continued to slide into distressed territory. Anthropic, a leader in AI model development, was reported to have sharply lowered its target valuation for an initial public offering after third-quarter revenue growth slowed significantly from the second quarter. As concerns mounted over whether investments in AI companies can be recouped, hedge funds moved to trim their exposure.
This week brings a series of events that will offer clues on whether AI investment can be sustained and turn profitable. At the Gartner IT Symposium on the 19th, participants will discuss how quickly companies are adopting AI, along with investment costs and productivity. Nvidia's annual developer conference, GTC, runs from the 20th to the 22nd, and Meta, Lam Research and IBM are scheduled to report earnings. If key companies in the AI value chain post strong results and maintain large-scale AI investment plans, the market could get a lift. If not, wider volatility appears unavoidable.
Market participants are divided on where Korean stocks go from here. Some point to the solid earnings fundamentals of chipmakers. Earnings forecasts for Samsung Electronics and SK hynix have been revised upward recently. ASML said in its latest earnings report that customers' medium- to long-term demand outlook is improving, and research firm TrendForce projected double-digit growth in DRAM prices in the fourth quarter. On that basis, some expect earnings at the KOSPI's two largest companies to stay strong, allowing the Korean market to trace a W-shaped curve and rebound.
Others say it is too early to call the recent rebound a trend reversal. The gain on the 16th was weak relative to the previous day's plunge, and the durability of foreign buying has yet to be confirmed. Lingering uncertainty over AI investment, which had been a driver of the market's earlier gains, is another source of unease. Market assessments of AI investment returns could improve or worsen around this week's major earnings reports.
"Caution toward AI-related stocks has grown, so volatility is hard to avoid for now," an official in the securities industry said. "It may be safer to allocate some assets to companies with more stable earnings, such as consumer goods makers."
