'Black Friday' KOSPI plunges 3.8% · exchange rate jumps 7.7 won…retail investors 'panic'

Foreigners' ₩2.8 trillion sell-off bomb

Exchange rate 1475.6 won…highest since April 9

The KOSPI plunged nearly 3.8% on the 21st, ultimately closing below the 3,900 level.

According to the Korea Exchange, the KOSPI closed at 3,853.26, down 151.59 points (3.79%) from the previous day.

The index opened at 3,908.7, down 96.15 points (2.40%) from the previous close, and widened its losses. At one point it dipped to 3,838.46.

The previous day, the KOSPI had reclaimed the 4,000 level with a 1.92% gain on the back of NVIDIA's "surprise earnings," marking the first time in three days. However, the trend reversed in just one day, freezing investor sentiment again. It is the first time in 20 trading days since the 23rd of last month that the index has fallen below not only the 4,000 level but also the 3,900 level.

On the day, foreign investors sold a net of 2.8 trillion won in the spot market. In contrast, individuals bought a net of 2.3 trillion won, shouldering the foreigners' selling volume.

Ji-young Han, a researcher at Kiwoom Securities, said, "From the U.S. market to the domestic market, we had a day of giving back the gains from NVIDIA's surprise earnings," adding, "Recently, the market has been reacting sensitively to various big and small news related to bubble concerns, especially around AI-related stocks. Substantial volatility across the market is expected for the time being."

Large-cap stocks by market capitalization fell sharply in the securities market. In particular, the heavyweight stocks Samsung Electronics and SK Hynix plunged 5.77% and 8.76%, respectively.

Overnight, renewed bubble concerns about artificial intelligence (AI), centered on senior U.S. Federal Reserve officials, had an impact. Fed Governor Lisa Cook targeted sectors potentially overvalued due to AI, saying, "Our assessment is that asset valuations across several markets, including equities and corporate bonds, are high relative to historical benchmarks." Matt Maley, chief market strategist at Miller Tabak, also noted, "The market questions whether AI will truly deliver the returns currently priced into stocks."

The KOSDAQ index also closed at 863.95, down 27.99 points (3.14%) from the previous session.

As tensions between China and Japan intensified, cosmetics stocks surged on signs that the so-called 'Hanil-ryeong' (China's restriction order on Japanese goods) might be coming into effect. The expectation is that if China restricts imports of Japanese cosmetics, South Korean products could benefit. Color cosmetics maker bbia jumped about 14%. Bonne and SelbioHumantech also rose more than 6% and 5%, respectively.

Meanwhile, in the Seoul foreign exchange market, as of 3:30 p.m., the won–dollar exchange rate rose 7.7 won to 1475.6 won. This is the highest level since April 9, when the exchange rate hit this year's peak.

Shin Min-kyung, Hankyung.com reporter radio@hankyung.com