[Seoul Market Wrap] KOSPI Crashes Below 5400 as Foreign Investors Bleed $34.25 Billion in Relentless Selloff

Wall Street Takes a Hit: Market Plunge Amid AI Regulation Fears

The domestic market witnessed a significant downturn on Friday, with both the KOSPI and KOSDAQ indices experiencing a sharp decline. Concerns over potential AI regulation stemming from the U.S. midterm elections, coupled with fears of a slowdown in memory semiconductor demand, led to a concentrated sell-off, particularly targeting large-cap semiconductor stocks. Foreign investors' net selling of over $3.4 billion further contributed to the KOSPI's fall below the 5,400 mark, while the KOSDAQ slipped below the 700 level.

According to the Korea Exchange, the KOSPI closed at 5,383.80, a decrease of 300.00 points (5.28%) from the previous trading day. The KOSDAQ ended at 678.41, down 36.54 points (5.11%). The won-dollar exchange rate rose by 0.6 won, settling at 1,342.1 won for the week.

The KOSPI opened in the red, influenced by worries over potential AI data center construction regulations following the U.S. midterm election results. These concerns were exacerbated by fears of a slowdown in memory semiconductor demand growth, leading to an expansion of foreign selling, particularly in the electrical and electronics sectors, resulting in a decline of over 5%.

Market Performance and Sector Analysis

The medical and precision equipment sector led the decline, falling 11.5%, followed by the electric and electronics sector, which dropped 8.5%. Machinery and equipment also saw a decrease of 5.4%, while the retail sector declined by 3.4%. Large-cap stocks retreated 5.7%, mid-caps dipped 0.8%, and small-caps eased 1.2%.

In terms of market flow, foreign investors net sold KRW 3.42 trillion, while institutions and individuals net bought KRW 841.7 billion and KRW 2.28 trillion, respectively. Foreign Investors net sold KRW 3.14 trillion in the electric and electronics sector, KRW 135.2 billion in the financial sector, and KRW 56 billion in machinery and equipment.

The Kosdaq index opened lower due to concerns over U.S. AI industry regulations and closed with a 5% decline. This was driven by expanded selling pressure from foreign and institutional investors, particularly in the machinery and equipment and electric and electronics sectors. Machinery and equipment fell 10.7%, non-metals declined 9.5%, and electric and electronics dropped 9.4%. Foreign Investors and institutions net sold KRW 75.8 billion and KRW 102.9 billion, respectively, while individuals net bought KRW 172.2 billion.

Individual Stocks Shine Amid Expectations of Expanded U.S. Healthcare Coverage and Strong Earnings

U.S. Midterm Elections Spark Healthcare Sector Rally

The Democratic Party's dominance in both the Senate and House of Representatives in the U.S. midterm elections has fueled expectations of expanded healthcare coverage. As a result, domestic pharmaceutical and biotech stocks witnessed an influx of buying pressure, with observers noting the potential for a slowdown in policies aimed at reducing health insurance support. Celtrion (068270) soared by 7.50%, while Hanmi Pharm (128940) climbed 9.80%.

SK Biopharm (326030) experienced a 12.27% surge, driven by its strong third-quarter performance. Consolidated revenue reached KRW 2,584 billion, a 34.8% year-over-year increase, while operating profit grew by 65.9% to KRW 1,163 billion.

Selvas Health (208370) rose by 17.02%, buoyed by growth expectations for its medical diagnostic devices and digital healthcare businesses.

Individual Stocks Shine Amid Shareholder Returns and Overseas Contracts

Companies announcing expanded shareholder returns also exhibited strength. Kakao (035720) rose by 10.65% after deciding to acquire and fully extinguish KRW 150 billion worth of its own shares.

Market Movers: A Look at the Top Gainers

• **Korea Zinc (010130):** The company's shares soared by 11.00% as it announced plans for a share buyback and a potential split of its par value. This move was well-received by investors.

• **Hyundai Department Store (069960):** With a rise of 6.44%, Hyundai Department Store saw an improvement in its third-quarter performance. Additionally, the decision to execute a share buyback further boosted investor confidence.

• **Disgence (113810):** A significant 7.55% increase was witnessed as the company decided to acquire its own shares worth ₩500 million. This strategic move indicates a positive outlook.

• **MHMaterials (001080):** Announcing a share buyback of ₩3 billion and plans for a subsequent share cancellation, MH Materials experienced a remarkable 12.03% surge.

• **CS Wind (112610):** The disclosure of a wind turbine supply contract with Vestas American Wind Technology, worth approximately ₩797 billion, led to a 6.27% increase in share price.

Sector Spotlight: Automotive and Aviation

• **Hyundai Motor (005380):** Hyundai Motor Company's shares rose by 3.53%, driven by expectations of eased tariff policies following the U.S. midterm elections.

• **Daedong Gear (008830):** Dae Dong Gear, part of the Dae Dong Group, saw a 6.11% increase after news emerged of discussions with Hyundai Motor Group and the Jeollabuk-do Province regarding the production and demonstration of agricultural robots in Saemangeum.

• **Jeju Air (089590):** With a substantial 13.75% gain, Jeju Air benefited from the anticipated reduction in aviation fuel costs due to the decline in international oil prices.

Market Movers: Late-Session Selling Pressure and Margin Call Liquidations

### clean country (004540)

clean country witnessed a surge, climbing 29.93% to hit its daily limit, following news of a transition to a sole representative system led by Chairman Choi Hyun-Soo.

### SK Hynix (000660) and Samsung Electro-Mechanics (009150)

In contrast, SK Hynix faced a sharp decline of 9.46%, amidst concerns over the potential impact of post-midterm election regulations on AI data center construction and memory demand in the US. Similarly, Samsung Electro-Mechanics saw a drop of 15.34%, driven by worries over a potential slowdown in electronic component demand due to reduced investment in American data centers.

### SKinnovation (096770)

SKinnovation's shares took a hit, falling 7.68%, as concerns mounted over potential inventory valuation losses in the refining sector due to the international oil price plunge.

### Sanil Electric (062040), Eco Pro BM (247540), and GSP&L (499790)

The late-session selling pressure extended to Sanil Electric, which plummeted 17.23% due to its underwhelming third-quarter performance, falling short of market forecasts. Eco Pro BM also experienced a decline of 7.72%, attributed to its lackluster third-quarter results. GSP&L followed suit, dropping 16.12% as its third-quarter performance failed to meet market expectations.

These late-session moves highlight the market's sensitivity to regulatory changes and demand dynamics, with margin call liquidations erasing intraday gains for some stocks.