The KOSPI index plunged again at the open on the 11th. With U.S. stocks having corrected sharply the previous day amid instability in the Middle East, investor sentiment toward Korean equities also appears to have weakened.
The KOSPI index started trading at 7,509.62, down 221.20 points (2.86%) from the previous session. Large-cap stocks by market capitalization, including major semiconductor names, are falling across the board. Just after the open, the index's decline is widening to more than 4%.
U.S. stock indexes all fell the previous day. In particular, the tech-heavy Nasdaq index dropped by nearly 2%. The consumer price index for May released overnight matched market expectations and did not deliver a major shock, but the United States and Iran, which are at war, reentered a phase of tension.
U.S. President Donald Trump warned that Iran had delayed negotiations for too long and would have to pay the price, and U.S. Defense Secretary Pete Hegseth signaled strikes on Iran's key facilities. As the situation in the Middle East worsened, international oil prices surged.
News also emerged that could act as a headwind for Korean semiconductor stocks. After Alphabet, Google's parent company, moved to raise funds through a paid-in capital increase last week, Super Micro Computer announced it would issue shares to raise $7 billion, sending its stock plunging. Oracle, whose free cash flow is negative, unveiled additional plans for a paid-in capital increase.
Global investment bank Barclays analyzed that "the capital-intensive limits of artificial intelligence (AI) hardware have become apparent, triggering profit-taking in previously rising stocks on fears of earnings-per-share (EPS) dilution across the supply chain."
Foreign investors are still net sellers on the KOSPI market. Institutions and individuals have a buying edge, but they are failing to defend against the index's decline.