During the Lunar New Year holiday, the adverse news about China's open-source artificial intelligence (AI) DeepSeek, which shook global stock markets, and the announcement of the U.S. interest rate freeze were reflected, resulting in a simultaneous drop in the KOSPI and KOSDAQ indices on the 31st.
As of 9:05 a.m. on that day, the KOSPI index recorded 2,502.23, down 33.73 points (1.36%) from the previous transaction day. Foreign investors alone sold a net 238.9 billion won, dragging down the index. Individuals and institutions bought a net 31.2 billion won and 206.6 billion won, respectively.
Among the top market capitalization stocks in the Korea Securities Market, semiconductor-related stocks are experiencing a sharp decline. Samsung Electronics and SK hynix are affected by deteriorating investor sentiment. SK hynix is down about 11% from the previous transaction day. LG Energy Solution, Hyundai Motor Company, Kia, and Hanwha Aerospace are also declining. In contrast, pharmaceutical stocks like Samsung Biologics and Celltrion, as well as financial stocks like KB Financial and Meriz Financial Group, are rising.
Previously, a Chinese startup, DeepSeek, recently unveiled the R1 model, a latest reasoning model boasting performance comparable to OpenAI's o1. DeepSeek noted that it took just over $5.5 million to train this model, raising questions about the competitiveness of large technology companies that have spent tens of billions of dollars on AI infrastructure.
Accordingly, Nvidia, which has led the AI ecosystem, plummeted 17% on the 27th (local time), and related stocks such as TSMC (-13.33%) and ASML (-5.75%) also fell sharply. The primary target of these semiconductor corporations is the high-value high-performance AI semiconductor market, and many companies are entering low-cost AI development, which poses a negative outlook.
The news of the U.S. Federal Reserve's (Fed) Federal Open Market Committee (FOMC) interest rate freeze, announced during the holiday period in January, is also being reflected in the domestic stock market today. While the freeze itself aligns with market expectations, it is considered neutral; however, changes in the language of the statement and the discord between the Trump administration and the Fed may have negatively impacted market sentiment.
However, overnight, the New York Stock Exchange closed with all three major indices rising. The Dow Jones Industrial Average finished at 44,882.13, up 0.38% from the previous day. The Standard & Poor's (S&P) 500 index rose 0.53% to 6,071.17, while the Nasdaq index finished up 0.25% at 19,681.75.
As discussions arise questioning the accuracy of DeepSeek’s publicized development expenses, and amid the suggestion of potential unauthorized data collection by OpenAI and Microsoft (MS), the atmosphere has temporarily moved away from panic.
At the same time, the KOSDAQ index recorded 725.18, down 3.66 points (0.50%) from the previous transaction day. Foreign investors and institutions are net buying 7.4 billion won and 5 billion won, respectively, while individuals are net selling 11.2 billion won.
The top market capitalization stocks in the KOSDAQ market show mixed trends. Pharmaceutical stocks such as Alteogen, HLB, LigaChem Biosciences, and Sam Chun Dang Pharm are rising, while Ecopro, ECOPRO BM, and HPSP are falling.
Han Ji-young, a research analyst at Kiwoom Securities, noted, “After starting lower, mainly among large-cap stocks like semiconductors, we will enter a phase of increased volatility during the trading session. However, I believe the intensity and duration of the adjustments will be limited.”