Shaken by China's artificial intelligence (AI) model "Kimi K3," the KOSPI index sank to the 6,500 level on the 20th. The slide reflected growing concern that big tech corporations' capital expenditures (CAPEX) could slow with the arrival of low-cost AI models.
Investors failed to find clear direction. After foreigners were net sellers early in the session, individuals turned to selling intraday, followed by institutions shifting to a selling bias near the close, leading to frequent handovers.
The KOSPI index closed at 6,516.27, down 304.33 points, or 4.46%, from the previous transaction day. After opening lower at 6,643.58, the index tried to turn higher during the session, but heavy selling widened losses and pushed it down to the 6,500 level.
Institutions posted a net sell of 920 billion won. Specifically, selling was strong from financial investment, where exchange-traded fund (ETF) flows are tallied, at 489.3 billion won, and from investment trust firms at 269.5 billion won. Individuals, who had been sellers early on, turned buyers before the close with a net purchase of 350 billion won. Foreigners were net buyers of 516 billion won.
AI-related negatives poured in over the holidays. Taiwan chip corporations TSMC reported record earnings, but the market took the annual CAPEX expansion as a signal of increased supply. With chip corporations delivering strong results on the back of supplier advantage and high average selling prices (ASP), concerns emerged that expanding supply could slow earnings.
China AI startup Moonshot's open-source large language model (LLM) "Kimi K3" also chilled investor sentiment. As expectations spread that cutting-edge AI models can be built at low expense, concerns rose that U.S. big tech's large-scale CAPEX could shrink.
Rising tensions between the United States and Iran sent global oil prices sharply higher. September Brent and West Texas Intermediate (WTI) futures each broke $90 and $83. The oil spike rekindled worries about tighter policy (rate hikes) due to expanded inflation.
Lee Kyung-min, a researcher at Daishin Securities, said, "The domestic stock market opened lower as it priced in external negatives accumulated during the market holiday," and added, "With bargain hunting and profit-taking crossing paths, foreigners, institutions, and individuals all failed to form clear directional flows, resulting in mixed trade."
Samsung Electronics(005930) and SK hynix(000660) fell 4% to close around 240,000 won and 1,760,000 won, respectively.
The KOSDAQ index plunged 5%, losing the 750 level. Having opened lower, the index deepened losses during the session. Foreigners and institutions were net sellers of 57.7 billion won and 134.8 billion won, respectively. Individuals alone bought a net 190.8 billion won, but it was not enough.
Wonik IPS(240810) and Jusung Engineering, among semiconductor materials, parts, and equipment corporations, saw steep drops. They each closed down 18% and 10%.
A "sell-sidecar (temporary suspension of program sell quotes)" was triggered on both markets. On the Korea Exchange, it is activated when KOSPI200 futures fall 5% or more, and on the KOSDAQ market when KOSDAQ150 futures drop 6% or more and the KOSDAQ150 index is down 3% for one minute.