With worries about an "artificial intelligence (AI) bubble" overlapping with a weak won, the KOSPI index lost the 4,000 level for the first time in 10 trading days. The KOSDAQ index also fell to the 870 level.
The KOSPI index closed at 3,953.76 on the 7th. It fell 72.69 points (1.81%) from the previous day. It was the first time the KOSPI lost the 4,000 level since on the 24th of last month (closing price 3,941.59).
The KOSPI index opened at 3,963.72 and looked set to rebound to 4,037.61, but the decline continued throughout the morning. It fell to as low as 3,887.32.
Overnight, as the U.S. New York stock market wavered, the drop widened after the United States banned exports to China of Nvidia's lower-spec AI chips. Investor sentiment weakened on the view that U.S.-China tensions could flare up again. In the afternoon, large caps staged a slight rebound, allowing the index to hold in the 3,900s.
The continued weakness of the won also weighed on the market. The won-dollar exchange rate stood at 1,456.9 won as of 3:30 p.m. in the Seoul foreign exchange market. It rose 7.6 won from the previous day.
The dollar index, which shows the value of the dollar against the currencies of six major countries, is currently around 99.8. When the won-dollar exchange rate surpassed the 1,450-won level early this year, the dollar index had surged to 110. Simply put, the impact of a weak won is standing out more than dollar strength.
The yield on Korea's 10-year Government Bonds also continued to rise, briefly topping the 3.2% level for the first time this year. Bond prices move opposite to yields, meaning Government Bond prices fell by that much.
In the main board, foreigners and institutions were net sellers of 472.2 billion won and 228.1 billion won, respectively, pulling the index down. Only individuals were net buyers, by 696.2 billion won.
Leading sectors including semiconductors, shipbuilding, defense, and nuclear power also failed to gain traction. Losses were pronounced in the defense sector.
LIG Nex1 announced a third-quarter "earnings surprise" (better-than-expected results) that beat market forecasts, but plunged 16.53% on expectations that fourth-quarter results could be weak. Hanwha Aerospace and Hyundai Rotem also posted stock price declines of 4.85% and 6.27%, respectively.
Other heavyweight stocks by market capitalization, including Samsung Electronics and SK hynix, LG Energy Solution, Hyundai Motor, Doosan Enerbility, and KB Financial, also finished the session at lower prices than the previous day.
The KOSDAQ market saw the same picture. The KOSDAQ index closed at 876.81, down 21.36 points (2.38%) from the previous trading day. The KOSDAQ index fell to as low as 864.67 intraday, then recovered the 870 level as foreign selling eased.
In the KOSDAQ market that day, institutions and foreigners were net sellers by 62.2 billion won and 1.1 billion won, while only individuals were net buyers, totaling 95 billion won.
Among the top 10 KOSDAQ stocks by market capitalization, only Peptron rose more than 13%, showing strength. Alteogen, EcoPro BM, EcoPro, and Rainbow Robotics recorded stock price declines in the 3% to 6% range.
The market was weak that day, but INNOTECH, a composite reliability environmental test equipment corporations that debuted on the KOSDAQ, achieved a "double-double" (a fourfold rise from the IPO price). INNOTECH showed strength from the opening and ended the day at 58,800 won, up 300%.
For the time being, the view is that a correction phase will continue. Researcher Jo Ain at Samsung Securities said, "In the domestic stock market, sustained large-scale selling by foreigners is adding to the depreciation of the won," and noted, "Market expectations for an end to the U.S. federal government shutdown (temporary halt of operations) remain low, and for the AI bubble argument and the sharp rise in the won-dollar exchange rate to calm down, the shutdown needs to end first."