[Seoul Market Wrap] KOSPI Crashes Below 5100 as Foreign Investors Bleed $27.68 Billion in Relentless Selloff

Intraday circuit breaker triggered due to concerns over US AI regulations… KOSPI plunged 6.02%, KOSDAQ also fell 5.03%... Strong selection of stocks related to tender offer and governance structure

On the 6th, the domestic stock market, KOSPI and KOSDAQ both plummeted. As concerns spread about strengthening regulations on the construction of artificial intelligence (AI) data centers after the U.S. midterm elections, foreign selling focused on large-cap semiconductor stocks. As the KOSPI fell more than 8% in early trading, a circuit breaker was activated, and the 5,000 level collapsed during the day. Afterwards, some of the decline was reduced, but KOSPI gave up the 5,100 mark.

According to the Korea Exchange, KOSPI ended trading at 5059.69, down 324.11 points (6.02%) from the previous trading day. KOSDAQ closed at 644.27, down 34.14 points (5.03%). The won-dollar exchange rate ended weekly trading at 1356.6 won, up 14.5 won from the previous trading day.

KOSPI started lower the previous day due to the weak US stock market due to concerns about strengthening US AI data center regulations. The decline was partially reduced due to the influx of institutional buying during the day, but it fell for two consecutive trading days as foreign selling continued, especially in the electrical and electronics industries.

By industry, electricity and electronics fell 7.9%, medical and precision equipment fell 7.2%, machinery and equipment fell 6.5%, and securities fell 5.7%. Large-cap stocks fell 6.3%, mid-cap stocks fell 3.3%, and small-cap stocks fell 2.3%, with large-cap stocks falling 2.3%.

In terms of supply and demand, Foreign Investors net sold 2.7685 trillion won, while institutions and individuals net bought 1.7 trillion won and 604.6 billion won, respectively. Foreign Investors net sold 2.0965 trillion won in electrical and electronics, 258.5 billion won in finance, and 91.1 billion won in pharmaceuticals.

KOSDAQ started lower the previous day due to the weakness of US technology stocks, and then fell for two consecutive trading days, showing weakness mainly in the electrical/electronic and machinery/equipment industries. By industry, medical and precision equipment fell 8.6%, metals fell 7.5%, and non-metals fell 7.3%. Foreign Investors and individuals net sold 101.3 billion won and 110.3 billion won, respectively, while institutions net bought 205.5 billion won.

Some stocks strengthened due to tender offer and change of largest shareholder

Lotte Rental (089860) rose 10.40% on news of global private equity fund management company TPG's tender offer and voluntary delisting, and Hanjin KAL (180640) also rose 2.99% on Hoban Group's emergence as the largest shareholder and the possibility of competition for additional shares.

Naver (035420) rose 2.87% on the news that global credit rating agency Standard & Poor's (S&P) maintained its long-term credit rating at 'A-' and its rating outlook at 'stable'.

Clean Country (004540) rose 11.07% as expectations continued for management stabilization following the transition to a sole representative system under Chairman Choi Hyun-soo.

Semiconductor and AI-related stocks plummet... Stock market stocks are weak

Samsung Electronics (005930) fell 6.35% as concerns spread about a reduction in AI investment in the United States, and SK Hynix (000660) plummeted 10.44% due to a sell-off in U.S. semiconductor stocks and concerns about a decline in data center investment.

AI semiconductor-related parts and materials stocks also showed weakness. Doosan (000150) fell 11.27% as concerns about the sustainability of AI investment were highlighted despite expectations of growth in the high-value copper clad laminate (CCL) business. Hansol Technics (004710) also fell 8.96% as investment sentiment related to it decreased despite expectations of growth in the semiconductor inspection probe card business.

Samsung Electro-Mechanics (009150) fell 7.84% due to concerns about a slowdown in demand for electronic components due to strengthening regulations on U.S. data center construction.

Securities stocks also showed weakness. Korea Financial Group (071050) plunged 17.34% due to poor performance in the third quarter, and Mirae Asset Securities (006800) fell 7.90% due to worsening investment sentiment following the plunge in the domestic stock market and weakness in the securities industry as a whole.

Sears (458870) plunged 29.95% as its third quarter performance turned into a loss.