On the 5th, the KOSPI index plunged on foreigners' "panic sell." Foreign investors were net sellers of 2.5 trillion won, dragging the index down. At one point in the morning, the KOSPI's decline reached 6%, breaking below the 3,900 level. Sell-sidecars were triggered in both the KOSPI and KOSDAQ markets in the morning. However, as retail money flowed in, the KOSPI barely defended the 4,000 level and ended the transaction.
The previous day, the U.S. stock market plunged on an artificial intelligence (AI) bubble theory, sharply denting investor sentiment. Experts said the KOSPI's two-day slide could be the start of a short-term correction phase.
The KOSPI finished at 4,004.42, down 117.32 points (2.85%) from the previous trading day. The KOSPI fell more than 3% from early trading. As losses deepened in the morning, the index briefly fell to the 3,800 level, but the drop narrowed in the afternoon.
In the main board, only retail investors were net buyers, purchasing 2.5657 trillion won. Foreigners and institutions were net sellers of 2.518 trillion won and 79.4 billion won, respectively.
The reason a large amount of foreign capital pulled out was the "overvaluation controversy" that hit the U.S. market the previous day. As it became known that hedge fund manager Michael Burry, the real-life figure behind the film The Big Short, took short positions in Palantir and Nvidia, the AI-centered overvaluation debate intensified.
The CEOs of Goldman Sachs and Morgan Stanley also fanned the controversy. They noted that the stock market could fall 10% to 20% within the next 12 to 24 months. Major U.S. benchmarks fell across the board, and Palantir, which released strong results, also tumbled.
Even so, the inflow of retail money helped defend the 4,000 level. Individual investors appeared to use the index drop as a buying opportunity. Experts said that as earnings improvements continue among major listed companies that have led the recent gains, and with expectations for policy momentum still intact, the index could rise further through year-end.
According to FnGuide, 12-month earnings forecasts for the top 200 corporations on the KOSPI market rose 18.7% over the past month. Policies to support the stock market are also expected to take shape by the end of this year. The government and the National Assembly plan to pass the third amendment to the Commercial Act within the year, including mandatory cancellation of treasury shares.
Researcher Lee Jae-won said, "There are no issues with policy momentum so far, and earnings estimates are still rising," adding, "At KOSPI 3,900, the forward price-earnings ratio (PER) based on 12-month forward earnings per share (EPS) is 10.4 times, which is only in the top 32% over the past 20 years."
Thanks to that, Samsung Electronics fell 4% but held 100,000 won, and SK hynix, whose intraday losses had deepened, ended down just 1%.
The KOSDAQ index also closed at 901.89, down 24.68 points (2.66%) from the previous trading day. In the KOSDAQ market, retail investors and institutions were net buyers of 564.5 billion won and 42.2 billion won, respectively, while foreigners alone were net sellers of 599.7 billion won.
In the KOSDAQ market as well, large-scale profit-taking emerged on concerns about the U.S. market decline and the economic backdrop, including interest rates and exchange rates. In the morning, a sell-sidecar was also triggered, following the KOSPI market.
In the Seoul foreign exchange market, the won-dollar exchange rate closed at 1,448.7 won, up 4.7 won (0.33%) from the previous day.