Semiconductor stocks collapsed under heavy foreign selling, pushing the KOSPI below 5,000. As foreigners dumped nearly 2.5 trillion won worth of shares in a single day, large-cap chipmakers such as SK hynix and Samsung Electronics took a direct hit.
On the 2nd, the KOSPI closed at 4,949.67, down 274.69 points, or 5.26%, from the previous trading day. Stocks plunged after news broke that U.S. President Donald Trump had tapped former Federal Reserve (Fed) Governor Kevin Warsh as the next Fed chair. As speculation grew that the rate-cut cycle could be coming to an end, concerns over shrinking market liquidity intensified, and large-scale foreign selling led the index lower.
Net foreign selling came to 2.4924 trillion won on the day. That is the largest amount since Nov. 21, 2025, when net selling reached 2.8308 trillion won. At that time, the KOSPI slumped as concerns about an artificial intelligence (AI) bubble rekindled on a surge in Nvidia's accounts receivable, compounded by hawkish remarks from Fed Governor Lisa Cook, sharply denting investor sentiment.
The foreign selling trend kicked into full gear starting last week. Foreign investors turned to a "sell" stance, offloading a net 2.3728 trillion won just last week (23–27). In particular, from the 29th of last month through the past three trading days, net selling was 1.512 trillion won, 1.9622 trillion won, and 2.4924 trillion won, accelerating with each trading day.
This stands in sharp contrast to the net buying streak foreigners maintained throughout January. Foreigners were net buyers of 1.1378 trillion won from Jan. 5–9, then posted a modest net sell of 145.4 billion won from the 12th–16th before buying 1.076 trillion won again from the 19th–23rd. However, starting last week they reversed course and launched large-scale selling.
The target was semiconductors. In just one day, foreigners dumped a total of 2.6676 trillion won in chip names, including 1.455 trillion won in SK hynix and 971.8 billion won in Samsung Electronics. SK Square (146.5 billion won) and HANMI Semiconductor (94.3 billion won) were also not spared from foreign selling.
The picture for small and mid-caps is also grim. Jeju Semiconductor (92.2 billion won) and ISU Petasys (19.9 billion won) and others finished sharply lower in succession, dragging down the entire sector. Brokerages say the liquidity squeeze is entering a full-fledged phase, dealing a direct blow across growth stocks such as semiconductors that had supported share prices.
Jeong Hae-chang, an analyst at Daishin Securities, said, "AI and growth stocks that had surged on ultra-low rates, abundant liquidity, and policy expectations are being affected one after another," and noted, "Reports that Nvidia is holding off on an OpenAI investment further dampened AI-related expectations, additionally weakening investor sentiment."
A sharp climb in the won-dollar exchange rate is also seen as a factor weakening investor sentiment. After holding in the 1,430-won range since the 27th, the rate jumped to 1,460 won on the day. When the exchange rate rises, foreigners' returns in dollar terms decline and currency loss risks grow, making them reluctant to buy stocks.