Korean stocks plunged on the 16th, with the KOSPI falling 6.37% to close at 6,820.60, erasing the previous session's 6.24% rally. The sharp reversal came as semiconductor sector concerns resurfaced, with news of CoreWeave considering hedging strategies against memory price declines and Chinese memory maker CXMT planning capacity expansion through an IPO. Individual investors purchased 3.6625 trillion won net but could not offset combined selling of 3.7472 trillion won by foreign and institutional investors amid broader global market weakness and investor sentiment deterioration.
KOSPI Records 463.81-Point Drop on Heavy Selling
The KOSPI index fell 463.81 points to 6,820.60 on the 16th, surrendering the 7,000 level just one day after recovering it with a 6.24% surge. The index opened 323.91 points lower at 6,960.50 and extended losses to reach an intraday low of 6,730.87. Selling pressure concentrated in large-cap stocks as foreign and institutional investors dumped shares in market-cap leaders, accelerating the index decline.
Individual Investors Buy 3.6625 Trillion Won Against Institutional Outflows
Individual investors attempted to defend the market by net purchasing 3.6625 trillion won worth of shares, but their efforts proved insufficient. Foreign investors sold 1.3781 trillion won net, while institutional investors offloaded 2.3691 trillion won. The combined institutional and foreign selling overwhelmed retail buying power.
CoreWeave and CXMT News Trigger Semiconductor Sector Selloff
Semiconductor sector concerns drove the market decline. News emerged that CoreWeave, a "neo-cloud" company, is considering using put options as a hedging strategy against memory price decline risks. Separately, Chinese memory maker CXMT announced plans to raise substantial capital through an IPO and expand production capacity, raising supply increase concerns. Wang Xi, chairman of Shenzhen Juxing Investment, told Bloomberg that "CXMT's listing is a watershed for China's semiconductor industry" and that "the emergence of a representative Chinese DRAM company challenging the global market long dominated by Samsung Electronics, SK Hynix, and Micron completes a core link in China's memory ecosystem." Reports that data center construction in New York was halted due to power supply and environmental issues added to negative sentiment, as investors worried about memory supply increases coinciding with potentially slower data center investment.
Kang Jin-hyuk, a researcher at Shinhan Investment & Securities, stated that "AI value chain-related stocks plummeted as profit-taking followed the previous day's surge and semiconductor doubts persisted." He added that "the Monetary Policy Board raised the base rate for the first time in 3 years and 6 months, but this was already reflected in the market, so the impact on the stock market was limited."
Samsung Electronics and SK Hynix Lead Major Stock Declines
Among top market-cap stocks, Samsung Electronics closed at 255,000 won, down 245,000 won or 8.77%. SK Hynix fell 240,000 won or 11.53% to 1,842,000 won. Other major stocks also declined sharply: SK Square dropped 12.3%, Samsung Electronics preferred shares fell 10.42%, Samsung Electro-Mechanics decreased 9.62%, Hyundai Motor declined 2.07%, and LG Energy Solution edged down 0.30%. Samsung Biologics was the sole gainer among large caps, rising 0.94%.
The KOSDAQ index closed at 791.84, down 37.56 points or 4.53% from the previous trading day. After opening at 813.32 and climbing to 816.47 in early trading, the index reversed course as selling expanded in semiconductors, secondary batteries, and growth stocks, falling to an intraday low of 786.59.
Investor frustration mounted as online investment community posts reflected market fatigue: "Guessing whether it will rise or fall is like an odd-even gambling game," "It has become Samsung Crazy Electronics. The stress every time I look at the stock screen is no joke," "Is this a stock market or a gambling house," and "It's like an unpredictable gambling house, so I'm not putting money in and just watching."
Sell-Side Circuit Breakers Activate in KOSPI and KOSDAQ
The sharp index decline triggered sell-side circuit breakers in both markets. In the KOSPI market, at 9:10:26 AM, the KOSPI 200 futures index fell 5.22% from the previous day's reference price, halting the effectiveness of program sell orders for 5 minutes. This marked the opposite direction circuit breaker activation just one day after a buy-side circuit breaker was triggered.
In the KOSDAQ market, a sell-side circuit breaker was activated around 10:20 AM as the KOSDAQ 150 futures price and spot index fell 6.07% and 5.52% respectively.
FAQ
What caused the KOSPI to fall 6.37% on the 16th?
The KOSPI fell 463.81 points to 6,820.60 due to semiconductor sector concerns, including news that CoreWeave is considering hedging strategies against memory price declines and CXMT's plans for IPO and capacity expansion. Reports of data center construction halts in New York also contributed to negative sentiment.
How much did foreign and institutional investors sell on the 16th?
Foreign investors sold 1.3781 trillion won net, while institutional investors offloaded 2.3691 trillion won. Individual investors purchased 3.6625 trillion won net but could not offset the combined institutional and foreign selling of 3.7472 trillion won.
What were the circuit breaker activations in Korean stock markets on the 16th?
A sell-side circuit breaker was triggered in the KOSPI market at 9:10:26 AM when the KOSPI 200 futures index fell 5.22% from the previous day's reference price. In the KOSDAQ market, a sell-side circuit breaker activated around 10:20 AM as the KOSDAQ 150 futures price and spot index fell 6.07% and 5.52% respectively.
