Kospi, Kosdaq Slump More Than 6% as Sell Sidecars Triggered in Both Markets

A U.S.-driven inflation shock and unease over artificial intelligence investment battered South Korean equities. Shortly after the open on Oct. 15, both the Kospi and Kosdaq fell more than 6%, triggering sell sidecars in both markets. Most heavyweight shares, including semiconductor stocks, also declined.

As of 9:23 a.m., the Kospi stood at 5,641.71, down 367.10 points, or 6.11%, from the previous session. The benchmark opened 5.59% lower and extended its losses as selling intensified. At 9:07 a.m., a sidecar temporarily suspending program sell orders was triggered for the second time in two days, after a similar move on Oct. 13.

The Kosdaq was also swept up in the selloff. After opening 4.79% below the previous session, the index fell to 767.70 at the same time. That was a drop of 56.18 points, or 6.82%. A sell sidecar on the Kosdaq market was triggered at 9:12 a.m.

Samsung Electronics fell more than 7%, while SK Hynix slid more than 8%. Overnight in the U.S., the debt burden of AI cloud company CoreWeave came into focus, while Gartner warned that returns on AI investment may fall short of expectations. That chilled sentiment toward related shares. It also weighed on expectations that increased data-center investment would boost semiconductor demand.

Weakness spread to other large-cap stocks. SK Square, LG Energy Solution, Samsung Electro-Mechanics, Hyundai Motor, KB Financial Group, Samsung Biologics, Samsung Life Insurance and Samsung SDI all fell, meaning all of the top 10 Kospi stocks by market capitalization were in the red. On the Kosdaq, Alteogen, EcoPro, EcoPro BM, Jusung Engineering and Rainbow Robotics declined. HLB, LEENO Industrial, EO Technics, Wonik IPS and Simmtech also traded lower.

Investor flows diverged by market. On the Kospi, foreign investors were net sellers of 982.8 billion won, while institutions were net buyers of 951.4 billion won and retail investors bought a net 4.1 billion won. On the Kosdaq, retail investors sold a net 112 billion won, while foreigners and institutions bought 106.8 billion won and 8.2 billion won, respectively.

Rising U.S. inflation helped drive the flight from risk assets. The U.S. consumer price index for September rose 3.7% from a year earlier, above the market forecast of 3.6%. Expectations for another Federal Reserve rate increase added to selling pressure on technology and growth shares.

U.S. stocks also fell on Oct. 14, led by technology shares. The Nasdaq Composite dropped 1.88%. The S&P 500 fell 1.11%, while the Dow Jones Industrial Average slipped 0.09%. Concerns over U.S. interest rates and AI investment are feeding through to South Korea's stock market.