With the KOSPI and KOSDAQ indexes each plunging 8% to 9%, Korea's stock market faced a "black Monday." As stocks tumbled, circuit breakers (temporary trading halts) were triggered on both markets, but they failed to calm the wave of panic selling.
On the day, Jensen Huang, the CEO of Nvidia, called the recent global semiconductor stock plunge a "buying opportunity," but it was not enough to stop the steep slide in the domestic market.
As U.S. jobs data over the weekend showed a much stronger-than-expected improvement, concerns grew that the Federal Reserve (Fed) would accelerate rate hikes, sharply denting investor sentiment.
On the 8th, the KOSPI closed at 7,484.41, down 676.18 points (8.29%) from the previous trading day. As volatility interruption mechanisms (VI) were triggered across top market-cap stocks, the KOSPI opened 1.38% lower at 8,048.09 and then quickly reversed into a plunge right after the open. In response, a circuit breaker and a "sell sidecar," which temporarily suspends the effectiveness of program sell quotes, were triggered in succession.
After it seemed to trim losses slightly, the decline widened again late in the session, and it closed down more than 8% from the previous trading day.
In the main board, foreigners and institutions dumped 250.9 billion won and 1.9422 trillion won, respectively. Individuals made a net purchase of 1.9479 trillion won, but it was not enough to defend the index.
The KOSDAQ market also took a pounding. The KOSDAQ index opened at 959.61, down 42.83 points (4.27%) from the previous trading day, then fell more than 7% early in the session, triggering a sell sidecar. As losses deepened late in the session, a circuit breaker was also triggered. The KOSDAQ index closed at 911.39, down 91.05 points (9.08%).
In the KOSDAQ market, foreigners were net buyers of 346.0 billion won, while individuals and institutions were net sellers of 162.9 billion won and 154.6 billion won, respectively.
The plunge in U.S. stocks over the weekend dealt a heavy blow to Korea's market. U.S. stocks fell across the board on strong jobs data and resulting concerns over monetary tightening. On the day, U.S. index futures were mixed around the flat line.
According to the U.S. Department of Labor's released May jobs data, the U.S. labor market is showing considerable strength. The month-over-month increase in May nonfarm payrolls came in at 172,000, more than double the market forecast of 85,000.
Such robust hiring fed concerns about Fed tightening. In particular, as semiconductor tech stocks plunged, the rally in Korea's market that had been led by major chip stocks hit a speed bump.
Over the weekend, the Philadelphia Semiconductor Index tumbled 10.26%. Along with concerns about Broadcom's (-7.92%) profitability slowing, Micron Technology (-13.25%), which had surged more than 900% over the past year, slumped as it faced the "memory boom peak" narrative.
Most of the top market-cap stocks on the main board finished sharply lower. Samsung Electronics fell 10.18% to end at 295,500 won, slipping below the "300,000 won Samsung" threshold. SK hynix also finished down 7.68% at 1,911,000 won.
By contrast, despite an index collapse of more than 8%, NAVER ended the session up 9.20% at 279,000 won from the previous trading day after news broke of its cooperation with Nvidia to build an artificial intelligence (AI) factory.
Brokerages see the sharp drop in Korea's market as a technical correction and a temporary phenomenon. Jo Ain, a researcher at Samsung Securities, said, "This correction is closer to a normalization of overheated positioning than to damage to the AI Semiconductor cycle," adding, "Earnings estimates for domestic corporations remain on an upward trajectory, and the latest decline has further increased the valuation appeal of the Korean market."
The won-dollar exchange rate also swung widely. In the Seoul foreign exchange market, the won-dollar rate opened sharply higher from the previous trading day, topping 1,560 won, but after President Lee Jae-myung said at a May 1 inauguration anniversary press conference that "the current exchange rate is not normal," it ended the weekly session at 1,535.0 won, down 4.1 won.