After starting down 4% on the 20th, the KOSPI tried to rebound on bargain hunting but is widening its losses again. The AI shock triggered by China's artificial intelligence (AI) model "Kimi K3" is having a larger impact.

On the morning of the 20th, the KOSPI index is shown at 6,523.54, down 297.06 points (4.36%) from the previous session, on the status board at the Hana Bank dealing room in Jung-gu, Seoul, after a steep drop at the open. The KOSDAQ index is also trading at 769.18, down 22.77 points (2.86%) from the previous session. /Courtesy of News1.

As of 12:00 p.m. that day, the KOSPI index was trading at 6,578.29, down 242.31 (3.55%) from the previous session. The index opened lower at 6,643.58 and tried to turn higher intraday by trimming losses, but renewed selling is widening the decline.

Individuals and institutions are net sellers of 321.4 billion won and 87.0 billion won, respectively. Foreign investors alone are net buyers of 384.8 billion won, helping defend against the index's drop.

Chip stocks are weak. Samsung Electronics(005930) and SK hynix(000660) are down 3% and are trading around 240,000 won and 1.7 million won. They turned higher intraday, but selling pressure pushed them back down.

During the holiday, negative AI news poured in. Taiwan chipmaker TSMC reported record earnings, but the market took its plan to expand annual capital expenditures (CAPEX) as a signal of future supply growth. Because the chip cycle is currently supported by high average selling prices (ASP) amid supply shortages, concerns grew that increased supply could slow price gains and profitability.

The open-source large language model (LLM) "Kimi K3" unveiled by Chinese AI startup Moonshot further chilled investor sentiment. As expectations spread that cutting-edge AI models can be developed at lower expense, worries emerged that U.S. Big Tech's large-scale CAPEX could be reduced.

At the same time, the KOSDAQ index was trading at 753.95, down 37.89 (4.79%) from the previous session. After opening lower, the index is widening its losses intraday. Foreign investors and institutions are net sellers of 148.9 billion won and 43.4 billion won, respectively.

Amid heavy selling that day, sell-sidecars were triggered on both markets. On the main board, a sell sidecar on KOSPI200 futures is triggered if a drop of 5% or more lasts at least one minute, while on KOSDAQ, a sell sidecar is triggered if KOSDAQ150 futures fall 6% or more.

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