On the afternoon of Oct. 31, the dealing room of Hana Bank's main branch in Jung-gu, Seoul. /Courtesy of News1

The global stock market was shaken by the Chinese open-source artificial intelligence (AI) DeepSeek before the Lunar New Year holiday, and our stock market was not free from its influence. With the emergence of DeepSeek, skepticism regarding investment in AI infrastructure has increased, leading to a significant drop in large-cap semiconductor stocks and power equipment-related companies, which constitute a considerable part of our stock market. On the securities market, foreign investors sold about 1.5 trillion won worth of spot and futures, pulling down the stock index.

On the 31st, the KOSPI index closed at 2,517.37, down 19.43 points (0.77%) from the previous trading day. The index started at 2,534.33, down 2.47 points (0.10%) from the previous trading day, and during intraday trading, it fell by more than 1%, dropping below the 2,500 mark. The downward trend intensified as the market reflected negative factors that emerged during the holiday period, including the impact of the Chinese AI startup DeepSeek and the Federal Open Market Committee (FOMC) decision to keep the key interest rate unchanged in January.

The exit of foreign investors was notable in the securities market. Foreigners sold 1.227 trillion won worth of spot and 341.3 billion won worth of futures, increasing downward pressure on the index. The net selling amount by foreign investors on this day was the highest since September 19 of the previous year (1.1713 trillion won). In contrast, individual investors made net purchases of over 1 trillion won, with 963.2 billion won in spot and 102.3 billion won in futures, while domestic institutional investors bought 196.3 billion won in spot and 229 billion won in futures.

Semiconductor-related stocks and power equipment stocks were directly affected by the shock from DeepSeek. SK hynix finished trading at 199,200 won, down 21,800 won (9.86%) from the previous trading day, with '200,000 anix' falling again. Claims that DeepSeek produces performance similar to ChatGPT with low-cost semiconductor chips suggest that SK hynix, which supplies high-function chips like HBM3E to Nvidia, has suffered the most severe impact.

HANMI Semiconductor, which belongs to the Nvidia value chain, also closed down 7,400 won (6.14%) at 113,200 won. Samsung Electronics also ended down 2.42%. However, because there was a prevailing sense that the stock price had recently hit a low point, along with news of HBM3E 8-tier supply to Nvidia, the extent of the decline was mitigated. In the KOSDAQ market, semiconductor equipment-related stocks such as Techwing, AP Systems, and AUROS Technology all experienced a decline.

Stocks in wiring and power equipment, such as HD Hyundai Electric, Hyosung Heavy Industries, LS ELECTRIC, Gaon Cable, Cheil Electric, and Samwha Electric, which had been rising due to expectations for benefits from the expansion of the AI industry, also plummeted. ETFs like KODEX US AI Power Core Infrastructure and SOL US AI Power Infrastructure, which attracted retail investors' interest by including AI power infrastructure stocks, fell by 9.67% and 4.39%, respectively.

Lee Kyung-min, a researcher at DAISHIN SECURITIES, noted, 'The domestic stock market reflected the DeepSeek shock that hit the global stock markets during the Lunar New Year holiday,' adding, 'Concerns over the slowdown of investment momentum in high-performance semiconductors and large-scale data centers and power facilities have increased the volatility of stock prices in the semiconductor and power equipment sectors.'

However, the emergence of DeepSeek was not reflected as a negative factor for all stocks. As expectations for the commercialization of low-cost AI models grew, stock prices in the software sector rose. On this day, stocks such as Naver, Kakao, ESTsoft, DOUZONE, as well as those in the gaming sector like KRAFTON and Pearl Abyss closed higher.

Lee Jae-won, a researcher at Shinhan Investment Corp., said, 'The emergence of affordable AI models has led to expectations for improved profitability in the software sector, resulting in a divergence in stock prices between hardware and software sectors.'

The news of the interest rate freeze from the January FOMC (Federal Open Market Committee) meeting held during the holiday period also appears to have impacted the domestic stock market. Although the freeze was in line with market expectations, changes in the wording of the statement and the potential for discord between the Trump administration and the Federal Reserve (Fed) appeared to negatively influence market sentiment. The existing phrase 'Inflation has made progress toward the Fed's target of 2%' was removed from this FOMC statement, and it was instead evaluated that 'Inflation remains somewhat elevated.'

The KOSDAQ index recorded 728.29, down 0.45 points (0.06%) from the previous trading day. The index started at 724.96, down 3.78 points (0.52%) from the previous trading day, and reduced its decline in the later part of the session. Foreign and institutional investors made net purchases of 29.4 billion won and 2.8 billion won, respectively, while individual investors sold 28.3 billion won net.

After Samsung Electronics announced in a conference call for its earnings report that it would start developing robots using the technology of Rainbow Robotics, the stock of Rainbow Robotics surged 21.26%. Other robotics stocks such as ROBOTIS and HIGEN RNM also rose.

Among the stocks with the highest market capitalization, Alteogen, Ecopro, and HLB rose, while Leeno Industrial and Enchem declined. MAUM.AI closed up by over 13% on news of preparing to launch a DeepSeek-based on-premises large language model (LLM). On this day, the transaction amounts for the securities market and KOSDAQ market were recorded at 13.255 trillion won and 6.4337 trillion won, respectively.

As of 3:30 p.m. on this day, the won to U.S. dollar exchange rate in the Seoul foreign exchange market rose by 21.4 won to 1,452.7 won. It rose above the 1,450 won mark again after five trading days.