Korea's stock market fell for a second straight day on the back of U.S.-driven concerns about an artificial intelligence (AI) bubble. As foreign funds kept leaving, the KOSPI index also lost the 3,930 level. However, thanks to inflows of individual funds, the index's decline was limited.
On the 19th, the KOSPI index closed at 3,929.51, down 24.11 points (0.61%) from the previous trading day. Foreign investors were net sellers of more than 1 trillion won, leading the index lower.
That day, the KOSPI index opened slightly higher at 3,966 points from the previous trading day but turned lower right after the open and fell to as low as 3,854 points. As the U.S. stock market wobbled on worries about an AI bubble the day before, selling centered on large-cap semiconductor stocks emerged.
The losses narrowed sharply in the morning. The reason was inflows of individual funds. Individuals were net buyers of more than 400 billion won that day. Institutions also showed net buying of more than 600 billion won, and a substantial portion of that is presumed to be individual funds flowing into exchange-traded funds (ETFs). Household funds flowing into the stock market effectively supported the index floor. The index even turned higher intraday, but after repeated fluctuations around flat levels, it closed lower.
Although individual funds are flowing in, the debate over an AI bubble is heating up. In U.S. financial markets, concerns persist that the profitability of big tech companies that have invested massive funds in the AI sector will deteriorate, leading to sharp swings in technology stocks.
The key driver that pushed the domestic stock market above the 4,200 level to record highs had been expectations that the earnings of large semiconductor companies such as Samsung Electronics and SK hynix would improve significantly thanks to the growth of the AI industry. But as voices gained traction that AI investment contains a bubble, large semiconductor stocks underwent a correction, and the market's uptrend was checked.
Hawkish remarks from the U.S. Federal Reserve, favoring monetary tightening, are also damping investor sentiment as expectations for a December rate cut recede.
The KOSDAQ index also ended lower that day. It finished at 871.32, down 7.38 points (0.84%) from the previous trading day. Foreign investors were net sellers of around 70 billion won, but institutions and individuals were net buyers.
Biotech stocks, which had shown strength recently, fell. Among large-cap names by market capitalization, Alteogen fell by nearly 3%, and shares of LigaChem Biosciences and HLB also declined.
Nvidia is scheduled to announce earnings in the early morning of the 20th, Korea time. The earnings release and the movement of the U.S. stock market are expected to affect Korea's stock market on the 20th.