On the 16th, the KOSPI fell below the 4,000 level for the first time in 10 trading days as worries about global artificial intelligence (AI) risks spread. Foreign investors led the decline, unloading about 1.4 trillion won worth of shares in the domestic stock market alone and putting strong pressure on the index.
The KOSPI closed at 3,999.13, down 91.46 points (2.24%) from the previous session. The index climbed to as high as 4,099.01 early in the session, but turned lower as selling by foreign and institutional investors poured in, widening the losses.
Foreign investors dumped more than 1 trillion won in the main bourse for the first time since the 2nd. Foreign investors and institutions posted net sales of 1.0301 trillion won and 225.7 billion won, respectively, while individuals bought a net 1.2547 trillion won worth of shares.
Foreign investors also net sold KOSPI 200 futures worth 315.9 billion won in the futures market, marking a second straight day of selling dominance.
A geopolitical risk reported by foreign media was behind the sharp deterioration in investor sentiment. The United States reportedly notified its ally the United Kingdom that it would suspend implementation of the "Technology Prosperity Deal (TPD)" due to delays in fulfilling trade agreements. The TPD, signed in Sep., centers on U.S. big tech corporations such as Microsoft (MS) and Google investing about 59 trillion won in the U.K. With cracks appearing in the TPD, a key pillar of global AI investment, doubts about AI-related growth swept the market.
Seo Sang-young, an analyst at Mirae Asset Securities, said, "The strategy has been confirmed in which the United States seeks to enforce its America-first policy by using physical blockades against adversaries and suspension of tech alliances against allies," and added, "This simultaneously highlighted geopolitical risks and concerns about the tech supply chain, strengthening risk-off sentiment and preference for safe assets."
Secondary battery stocks slumped broadly. That was because the European Union (EU), which had aimed for a full transition to electric vehicles by 2035, decided to continue producing internal combustion vehicles. LG Energy Solution fell in the main bourse.
Among other top market-cap stocks, all were weak except Samsung Biologics (1.02%) and Doosan Enerbility (0.26%). HD Hyundai Heavy Industries and SK hynix fell more than 4%, while Kia (-2.58%), Hyundai Motor (-2.56%), Samsung Electronics (-1.91%), and KB Financial Group (-0.96%) declined.
The KOSDAQ index also fell more than 2%. It finished at 916.11, down 22.72 points (2.42%) from the previous session. It was the first time in 12 trading days that the KOSDAQ had fallen to the 910 level since Nov. 28 (closing 912.67).
On KOSDAQ, foreign investors and institutions posted net sales of 353.9 billion won and 6.3 billion won, respectively, while individuals bought a net 403.1 billion won.
Most top market-cap stocks on KOSDAQ also flashed red. Secondary battery names EcoPro and EcoPro BM plunged 8.08% and 7.90%, respectively. Rainbow Robotics (-3.87%), Kolon TissueGene (-3.62%), LigaChem Biosciences (-3.20%), Alteogen (-2.87%), ABL Bio (-2.76%), HLB (-1.91%), Peptron (-1.67%), and Sam Chun Dang Pharm (-1.52%) were also weak.
Experts said U.S. economic data due this week and Micron's earnings will determine the direction of share prices ahead.
Lee Jae-won, an analyst at Shinhan Investment & Securities, said, "Broadcom's results have turned to disappointment, extending declines in the semiconductor sector," and added, "The U.S. nonfarm payrolls due today and Micron's earnings announcement on the 17th will be a critical turning point."
Meanwhile, the won-dollar exchange rate stood at 1,477 won as of 3:30 p.m. in the Seoul foreign exchange market, up 6 won from the previous day.