Why we are not buying today's plunge

Today's mood

KOSPI plunged 7.57% to 5,554.22 and KOSDAQ fell 7.65% to 760.82. A sell-side sidecar fired early, and after noon both markets hit Level 1 circuit breakers together for the first time since July 29 (Edaily).

Yesterday's checkpoint, how it turned out

Yesterday we said we would watch whether KOSPI held above 6,000 after US CPI and whether foreign net selling stayed at or below 1.1729 trillion won. We were wrong. KOSPI fell from 6,008.81 to 5,554.22, and foreign net selling grew more than threefold to 3.7178 trillion won (provisional, 16:22). US September CPI coming in above expectations was the direct trigger.

KOSPI has fallen seven sessions in a row, down 20.7%

The index went from 7,003.74 to 5,554.22 in seven sessions, a 20.7% drop. It is the first seven-session losing streak in about two years and one month (Seoul Economic Daily). On KOSPI, 789 of 919 stocks fell, or 85.85%; on KOSDAQ, 1,592 of 1,740 fell, or 91.49% (Hankyung). This was not a few chip stocks dragging the index down. The whole market was sold in one direction.

US inflation and AI funding worries arrived together

US September CPI rose 3.7% from a year earlier against the 3.6% forecast. Hankyung reported that this lifted the probability of a Fed hike this month from the 20% range to the 30% range. On top of that, the bond yield of AI cloud firm CoreWeave neared 15% and its shares fell 15.46% (Seoul Economic Daily). Nvidia and Micron fell 3.16% and 4.10% overnight, and the Nasdaq lost 1.88%.

Daishin sees three shocks converging on Korean chips

Lee Kyung-min of Daishin Securities said three external shocks, higher short-term rates from US inflation, doubts about AI infrastructure returns and memory competition, all converged on Korean semiconductors. She added that a chip-heavy market, foreign selling and unwound leverage widened the drop (Hankyung). Hwang Su-wook of Meritz Securities said the market may have overreacted somewhat, but advised staying cautious until signs appear that funding worries are easing (MoneyToday).

Foreigners sold more than 3.7 trillion won

On KOSPI, foreigners net sold 3.7178 trillion won (provisional, 16:22), while individuals bought 1.3889 trillion and institutions 1.6857 trillion. Final tallies differ somewhat by outlet. On KOSDAQ foreigners bought 216.7 billion won, the opposite direction. Yesterday’s foreign net selling was 1.1729 trillion won, so it more than tripled in one day.

Electronic equipment, electrical equipment and chips fell most

On Naver Finance sector indexes, electronic equipment fell 14.38%, electrical equipment 13.03% and semiconductors and equipment 10.97%. Communications equipment (-9.50%) and life insurance (-8.64%) also dropped sharply. Commercial services rose 4.81% and computers and peripherals 1.54%, but gainers were few even there. Pharmaceuticals rose 0.20% on average while 141 of 174 stocks fell.

Samsung Electronics fell 9.48% a week after its 107 trillion won profit

On October 8 Samsung reported third-quarter operating profit of 107.4 trillion won, the first time a Korean company topped 100 trillion won in a quarter. Today the stock fell 9.48% to 210,000 won, its first fall to the 210,000 level since late July (MoneyToday). The profit was already priced in, and the market is asking whether it can last. Beginner’s note: operating profit is what a company earns from its core business, while the share price moves first on expectations of future profit. A strong report can still be followed by a fall if expectations were higher or the outlook looks shaky.

Photo: DrHughManning / Wikimedia Commons (BY-SA 4.0)

SK hynix fell 11.06%, below 1.28 million won

SK hynix closed down 11.06% at 1,262,000 won. Hanmi Semiconductor fell 11.63% and Samsung Electro-Mechanics fell 15.36%, the biggest drop among the stocks we follow. Once again, when chips wobble, equipment and parts wobble more.

Top-turnover stocks fell across the board

The stocks with the highest trading value were SK Square (-10.21%), Jusung Engineering (-14.97%), Samsung SDI (-8.63%), Hyosung Heavy Industries (-14.71%), SK Innovation (-5.02%) and Daeduck Electronics (-10.69%). Where trading piled up was where selling piled up. SK Square led with 815.4 billion won in turnover. As the table below shows, most of the biggest decliners are also down roughly 20% over five sessions.

Only Samsung Biologics rose, up 5.50%

While chips and power equipment collapsed, Samsung Biologics rose 5.50% to 1,247,000 won and Celltrion gained 1.28%. The sector did not rise as a whole. Alteogen fell 4.90%. With biotech names going both ways, calling the group defensive from the label alone is hard.

KOSDAQ and the won

KOSDAQ fell 7.65% to 760.82. Individuals net sold 66.0 billion won and institutions 164.6 billion, but foreigners bought 216.7 billion. The dollar-won rate was 1,342.5 won on the Hana Bank notice, almost unchanged from the prior session. It is notable that the currency barely moved while stocks fell this far.

October has been a weak month for KOSPI

Over the past 20 years KOSPI’s October average return was -0.70%, the median -1.43%, and it rose in 47% of years (Yahoo Finance index history). This year the index is already down more than 10% in half a month, far beyond the average, so seasonality hardly explains today. Still, the faster the fall, the rougher the rebound tends to be.

What to watch before the next session

The first thing to watch tomorrow is whether KOSPI holds near today’s intraday low. Han Ji-young of Kiwoom Securities noted that after more than five straight sessions of steep losses, the market usually went through a bottoming process instead of an immediate V-shaped rebound (Seoul Economic Daily). We will also watch whether AI infrastructure stocks stabilize in tonight’s US session and whether foreign net selling on KOSPI shrinks from today’s level.

What our research turned up

Gartner expects cumulative AI infrastructure investment of about 7 trillion dollars from 2026 to 2030 against data center revenue of only about 3.6 trillion dollars, implying roughly 3.5 trillion dollars of assets could be impaired (Seoul Economic Daily). Anthropic’s third-quarter revenue of 16.8 billion dollars, up 46% from the prior quarter, shows end demand has not broken. The market’s concern is not demand but the speed of debt-funded building.

According to Hankyung, 789 of 919 KOSPI stocks and 1,592 of 1,740 KOSDAQ stocks fell. More striking than the 7% index drop is its breadth: not only chips and power equipment but many sectors seen as defensive fell with them.