Black Thursday: KOSPI Plunges Below 5600, Tech Stocks Bleed Under Heavy Selling, Margin Calls Loom

KOSPI falls to 5593 levels during intraday trading... Samsung Electronics plunged 7.76% and SK Hynix 9.94%, and selling spread to Samsung Electro-Mechanics and Samsung SDI... Credit loan burden of 34 trillion won

The KOSPI even fell below the 5,600 mark during the day on the 15th due to the weakness of U.S. semiconductor stocks, concerns about the profitability of artificial intelligence (AI) investment, and a higher-than-expected consumer price index (CPI). Following Samsung Electronics and SK Hynix's plunge of up to 8% and 10%, respectively, selling spread to major technology stocks such as Samsung Electro-Mechanics and Samsung SDI. While selling sidecars have been activated in both the KOSPI and KOSDAQ markets, concerns are growing about additional counter-selling due to the 34 trillion won credit transaction loan balance.

According to the Korea Exchange on the 15th, KOSPI started at 5673.01, down 5.59% from the previous trading day, and then expanded its decline and fell to the 5588 level during the day. Following a 5.46% plunge on the 13th, it fell 0.44% on the 14th, falling not only to the 6,000 level but also to the 5,600 level in just one day after finishing trading at 6,008.81.

KOSPI, which had been pushed to 5911.11 during the day on the 13th, continued its unstable trend, fluctuating around the 6000 mark on the 14th. Investment sentiment sharply weakened due to concerns about Chinese memory companies catching up with technology, large-scale selling by Foreign Investors, and weakness in U.S. technology stocks, which added to the price shock.

#### Beyond semiconductors, electronic components and batteries... Technology stocks plunge in all directions

On the 13th, as it became known that China's Changshin Memory (CXMT) was likely to pursue next-generation DRAM technology, concerns arose about intensifying competition in the domestic memory industry. Samsung Electronics and SK Hynix fell 7.39% and 10.09%, respectively, due to controversy over profitability due to increased investment in AI infrastructure and large-scale selling by Foreign Investors. It has not been confirmed whether CXMT's technology development plan will actually lead to large-scale mass production and securing yield.

Foreign Investors recorded a net selling of KRW 4 trillion in the KOSPI market on the 13th, followed by net selling of KRW 1.1813 trillion on the 14th, showing a selling advantage for 7 consecutive trading days. On the 14th, the net selling amount to SK Hynix and Samsung Electronics was KRW 731.9 billion and KRW 178.5 billion, respectively, reaching KRW 910.4 billion for the two stocks alone.

On the 14th, following the performance announcement of Dutch semiconductor equipment company ASML, it was assessed that it did not meet market expectations, leading to continued caution about the semiconductor industry. As the US September inflation rate exceeded expectations, the selling of technology stocks also expanded in the New York Stock Exchange.

The September CPI announced by the U.S. Department of Labor on the 14th (local time) rose 3.7% compared to the same month last year, exceeding market expectations of 3.6%. Core CPI excluding food and energy also rose 2.6%, higher than the expected 2.5%.

The Nasdaq index fell 1.88% and the Philadelphia Semiconductor Index plunged 4.30%. Micron Technology fell 3.88% and AMD fell 2.28%. AI data center companies Coreweave and Oracle also fell behind significantly due to concerns over borrowing burden and investment profitability.

In the domestic stock market, selling spread not only to large semiconductor stocks but also to the electronic components and battery industries. Samsung Electro-Mechanics and Samsung SDI also plummeted, putting downward pressure on all technology stocks with top market capitalization.

As the selling pressure intensified, selling sidecars that temporarily suspended the effectiveness of program selling prices were activated one after another in the KOSPI and KOSDAQ markets. As the stock price correction that started centered on semiconductors spread to major technology stocks, the index decline also increased.

#### Opposition sale 59.3 billion won... Additional burden on credit balance of 34 trillion won

As stock prices continue to plummet, the risk of forced selling by investors who purchased stocks with debt is also increasing.

According to the latest statistics released by the Korea Financial Investment Association, the actual counter sale amount compared to consignment sale receivables on the 13th was KRW 59.34961 billion, the largest amount since KRW 122 billion on July 31. The proportion of reverse sales compared to receivables also increased from 2.7% on the previous trading day to 5.6%.

The credit transaction loan balance also reached 34.2529 trillion won. Although it decreased slightly from the previous trading day, it increased by more than 860 billion won compared to the end of September. Even with the recent stock market correction, a significant portion of the funds used to purchase stocks with debt remain.

For credit loans, additional collateral must be paid if the collateral value of the stocks held falls below a certain level. If the shortfall is not met within the deadline, the securities company may be forced to sell the stocks it holds, so there is a possibility that the recent continuous sharp decline may lead to subsequent sales volume.

The 59.3 billion won previously calculated is the amount of reverse sales due to unpaid transactions, and is distinguished from forced sales due to lack of collateral in credit loan accounts. The actual disposal time also varies depending on the collateral maintenance ratio and additional collateral payment deadline for each securities company.

As selling volume poured into major technology stocks, including semiconductors, immediately after opening on the morning of the 15th, there is a possibility that reverse trading may have increased the decline. If the number of accounts lacking collateral has increased due to the recent plunge, forced selling could lead to additional downward pressure.

In a situation where foreign selling continues, if counter-selling volume is also released, the decline in the stock price may lead to a vicious cycle of lack of collateral and forced selling. With KOSPI reaching the 5,600 level during the day, the credit loan balance of around 34 trillion won is emerging as a burden for additional selling in the stock market.