KOSPI Plunges 5%, Triggering Alert for 8,000 Line

*Editor's Note: 'AI PRISM' (Personalized Report & Insight Summarizing Media) is an "AI-based customized news recommendation and summarization service" developed with support from the Korea Press Foundation. It selects and provides six customized news items by reader type.

1. Broadcom Shock, SpaceX-Driven Fund Outflows..."First Support Line is 8,000"

- Key Summary: Broadcom presented its third-quarter artificial intelligence (AI) revenue forecast at 16 billion dollars (about 24.616 trillion won), below market expectations, rapidly cooling semiconductor investor sentiment, and the KOSPI plunged 5.54% (478.82 points) to close at 8,160.59, triggering the year's tenth sell-side sidecar (suspension of program trading). Samsung Electronics (005930.KS) closed down 6.40% at 329,000 won, and SK hynix (000660.KS) closed down 9.92% at 2.07 million won, while foreigners recovered a cumulative 70.2 trillion won through 20 consecutive trading days of net selling. Analysts said demand to raise cash from leading semiconductor stocks ahead of SpaceX's Nasdaq listing scheduled for the 12th of this month also played a part. With the KOSPI's gain from the start of the year at 93.65%, higher than Taiwan (60.41%) and Japan (32.34%), profit-taking pressure weighed heavily, and experts said a short-term correction is inevitable, presenting the first support line at 8,000.

2. "Market Fundamentals Still Positive...Watch AI, Defense, and Income ETFs"

- Key Summary: Ryan O'Connor, CEO of Global X, said in an interview with Seoul Economic Daily on the 5th that the cause of increased market volatility is geopolitical factors and that market fundamentals remain positive thanks to structural positives such as AI advancement, presenting AI value chain, defense, and income ETFs as this year's killer products. The AI theme ETF 'Global X AIQ' has assets under management (AUM) of 10.3 billion dollars (about 16 trillion won), and SpaceX, set to list on the Nasdaq on the 12th of this month, is expected to be included in the space tech ETF 'Global X ORBX,' with related investment inquiries surging. In addition, the AI semiconductor and quantum computing ETF 'Global X CHPX' surpassed 200 million dollars (about 308.2 billion won) in assets under management just six months after launch, and a new ETF centered on Asian defense companies is also in preparation. Global X, which Mirae Asset Global Investments acquired for 8.1 billion dollars in 2018, now has assets under management of 100.6 billion dollars (about 154 trillion won), more than a 12-fold increase over eight years.

3. Airport Exchange "1 Dollar = 1,600 Won"...Won Falls Most Among Major Currencies

- Key Summary: The won-dollar exchange rate soared to 1,549.1 won intraday on the 5th, approaching the highest level since the 2009 financial crisis, and the dollar cash selling rate at the Woori Bank branch at Incheon Airport recorded 1,603 won, reproducing the "1 dollar = 1,600 won" level last seen during the financial crisis. Since February 27, just before the outbreak of the Middle East war, the won's value has fallen 6.9%, posting an overwhelmingly larger decline than major currencies such as the Japanese yen (-2.5%), the euro (-1.7%), the British pound (-0.5%), and the Taiwan dollar (-0.4%). Meanwhile, as a result of the combined effects of the Middle East energy-dependent economic structure, expectations of U.S. interest rate hikes, foreign stock selling, and yen weakness, experts forecast the won-dollar exchange rate will continue to fluctuate between 1,500 and 1,560 won for the time being. With verbal intervention by foreign exchange authorities also proving insufficient against actual dollar demand, a stronger won is difficult to expect without normalization of the Strait of Hormuz and inflows of foreign funds.

4. 'S·T·O·R·M' Fear Looms..."Conventional Economic Wisdom Alone Cannot Find Solutions"

- Key Summary: Former heads of economic ministries and academic experts diagnosed the "triple-high phenomenon" of high exchange rates, high inflation, and high interest rates as a complex crisis difficult to address with microscopic prescriptions alone, calling for a review of the economic team's crisis response system. Yoo Il-ho, former Deputy Prime Minister for the Economy, said, "Domestic individual investors took on debt to prop up the space left by foreigners taking profits and exiting," pointing out that the stock market's rise was an illusion driven by two major semiconductor companies. Accordingly, experts said macroeconomic approaches such as interest rate policy are needed to stabilize the exchange rate but are not easy due to debt burdens and concerns over an economic slowdown, urging policy coordination centered on monetary policy with fiscal policy focused on protecting vulnerable groups. With capital outflows exceeding the current account surplus, compounded by dollar outflows for domestic companies' expanded U.S. investment, a structure of rising exchange rates in which demand overwhelms supply is taking hold.