Korea's stock market tumbled on the 2nd on concerns that investment in artificial intelligence (AI) infrastructure could slow. With short-term overheating in share prices piling up, heavy profit-taking hit semiconductor stocks in particular.
The KOSPI closed at 7,648.09, down 655.32 points (7.89%) from the previous session. Opening at 7,933.10, down 4.46% from the previous session, the KOSPI's losses widened to more than 5% after the open, triggering a "sell sidecar," a measure that temporarily suspends the effectiveness of program sell quotes. The index then rebounded, trimming losses to the 2% range, but selling intensified in the afternoon, and it ended down more than 7%.
An overnight plunge of more than 6% in the Philadelphia Semiconductor Index on Wall Street dealt a direct blow to the domestic market. A report that Meta is considering entering the cloud infrastructure business by selling surplus computing resources at its AI data centers to external corporations spurred selling in semiconductor stocks.
Market watchers said Meta's new business plan likely intensified competition with existing cloud providers, dragging the broader sector lower. As interpretations emerged that AI computing supply may be outstripping demand, concerns spread about a global slowdown in AI infrastructure investment. In Korea's market, large-cap memory chip stocks that had led gains and accumulated sell orders suffered steeper declines.
In the main board, foreigners and institutions sold heavily in tandem. Foreigners were net sellers of about 4.7 trillion won, and institutions about 2.8 trillion won. Individual investors countered by net buying about 7.3 trillion won, but it was not enough to stem the index's slide.
The KOSDAQ also could not escape a simultaneous plunge. The KOSDAQ index finished at 866.72, down 62.63 points (6.74%). Starting at 904.53, down 24.82 points (2.67%) from the previous session, the KOSDAQ's losses deepened past 6%, triggering a sell sidecar at 12:47 p.m.
On the KOSDAQ, concurrent selling by foreigners and institutions also pulled the index down. Institutions and foreigners were net sellers of about 350 billion won and about 200 billion won, respectively, while individuals were net buyers of 500 billion won.
Among top market-cap names on the main board, Samsung Electronics and SK hynix fell 28,500 won (9.06%) and 373,000 won (14.57%) from the previous session. Samsung Electro-Mechanics and SK Square also dropped 14.57% and 12.65%, respectively, posting sharp losses.
In the securities industry, analysts said concerns about a slowdown in AI investment that shook the market that day were somewhat overdone.
Jo A-in, an analyst at Samsung Securities, said, "Meta's move to monetize computing resources should be seen not as an attempt to cut AI infrastructure investment but as a way to raise utilization of existing resources," adding, "If anything, securing a new revenue source improves cash flow and helps ease the burden of massive capital expenditure (Capex)."
Experts said the recent volatility reflects short-term overheating after the Philadelphia Semiconductor Index jumped about 88% in the second quarter, marking a record quarterly gain, rather than the emergence of a new negative catalyst. They added that in high-performance memory chips, a boom persists in which supply still cannot keep up with demand.
Jo said, "In the end, the market will go through a process of confirming visible 'numbers (earnings)' rather than excessive 'speculation,'" and added, "If Samsung Electronics' preliminary second-quarter results due next week show strong earnings that beat market expectations, the recently heightened doubts about the sustainability of AI investment are likely to ease."
She added, "In the past, leading stocks also continued their earnings-based uptrends while repeating corrections of around 10% to 20%, so in today's volatile market, it is better to wait and see or use a staggered buying strategy rather than rushing to sell."