The KOSPI, which had once surged to just below the 9,000 mark, plunged more than 5% in a single day, threatening the 8,000 line. The drop came as Samsung Electronics (005930.KS) and SK hynix (000660.KS), the leading stocks of the domestic market, were hit directly by weakness in U.S. chip stocks, compounded by analysis that global funds were cashing out ahead of the SpaceX listing. In this week's Sunday Money Cafe, we examine the background of the market plunge on the 5th of this month, dubbed "Black Friday," along with the outlook ahead.
KOSPI Hit Directly by Heavy Foreign Selling
According to the Korea Exchange on Sunday, the KOSPI closed at 8,160.59 on the 5th, down 478.82 points, or 5.54%, from the previous session. During the session, it fell as low as 8,038.10, raising concerns about a collapse of the 8,000 line. The KOSDAQ also closed down 4.50% at 1,002.44, and during the session dropped to 992.80, briefly surrendering the 1,000 line for the first time in three months.
At the center of the plunge was the continuing exodus of foreign investors. Foreigners sold 4.224 trillion won worth of shares on the stock market, dragging the index lower. Their net selling over the most recent six consecutive trading days exceeded 27 trillion won, and since the 7th of last month they maintained a selling advantage for 20 consecutive trading days. Individuals, by contrast, net bought more than 4 trillion won, in what was observed as bargain hunting.
The ceiling-piercing won weakness also weighed on the market. On the 5th, the won-dollar exchange rate closed at 1,539.1 won, and during the session soared to the 1,549 won range, marking the highest level since 2009. Han Ji-young, a researcher at Kiwoom Securities, said, "Foreign net selling spurs the exchange rate higher, and when the rate rises, additional selling appears due to concerns over foreign exchange losses," adding, "A negative 'loop' between foreign net selling and the exchange rate is forming."
Samsung and SK hynix Shaken by U.S. Market Shock
U.S. chip company Broadcom presented an outlook for artificial intelligence (AI) chip sales that fell short of market expectations, causing investor sentiment to freeze rapidly. On Thursday, Broadcom plunged 12.59%, and Micron Technology (-7.74%), SanDisk (-3.92%) and Western Digital (-3.13%) also fell in succession. Then on Friday, the tech-heavy Nasdaq Composite Index plunged 4.18% from the previous session, fueling anxiety that a shadow could once again fall over the domestic market the following week.
In the domestic market, leading chip stocks Samsung Electronics and SK hynix were hit directly. Samsung Electronics closed at 329,000 won, down 6.40%, and SK hynix closed at 2.07 million won, down 9.92%. Single-stock leverage products on Samsung Electronics and SK hynix, which had drawn popularity from "beast" investors, also plunged around 13% and 20%, respectively.
The problem is that the KOSPI index has recently leaned too heavily on the two stocks. The two stocks surged 59% and 79%, respectively, since May, and over the same period their combined share of the stock market's market capitalization expanded from 40.8% to 52.2%. With a structure established in which more than half of the domestic market is effectively swayed by the movements of the two stocks, the burden of "concentration" has grown even greater. Indeed, on Thursday Japan's Nikkei 225 fell just 1.31% and China's Shanghai Composite fell 0.74%, but the KOSPI dropped more than 5%, drawing a larger decline even amid a profit-taking phase.
SpaceX Becomes a Global Money "Black Hole"
The securities industry views the SpaceX listing as one background factor behind this plunge. The analysis is that with the U.S. Nasdaq listing scheduled for the 12th of this month right around the corner, global investors are realizing profits from the short-term surge in the Korean market to raise cash.
Investment fervor was hot domestically as well. The first subscription round for SpaceX shares conducted by Mirae Asset Securities for professional investors sold out its entire $300 million (about 460 billion won) allotment within one minute of opening. Lee Kyoung-min, a researcher at Daishin Securities, explained, "Along with a contraction in risk-asset appetite, panic-style selling occurred due to the exit of global liquidity following the SpaceX listing," adding, "As a result, a pattern emerged in which sectors fell across the board."
Furthermore, beyond SpaceX, the possibility of listings by mega-cap tech firms such as OpenAI and Anthropic is also a focus of market attention. Concerns are growing that if large growth-stock initial public offerings (IPOs) continue, global liquidity could shift from existing markets to newly listed stocks.
Start of a Correction, or a Breather?
Market attention is now focused on whether this plunge marks the start of a full-fledged correction or is merely a short-term profit-taking. While the view that attention should be paid to correction and sector rotation for the time being prevails, assessments are also emerging that AI infrastructure investment and the memory industry trend remain valid over the long term.
Lim Jung-eun, a researcher at KB Securities, projected, "Major macro events and large supply-demand schedules, such as the U.S. May CPI and the SpaceX listing, are set to follow," adding, "In the process of digesting these schedules, it is necessary to watch for an expansion of short-term volatility in semiconductor and AI-related stocks and whether sector rotation into other industries develops."
Lee Eun-taek, a researcher at KB Securities, noted, "Over the long term we maintain a preference centered on semiconductors and KOSPI large caps, but considering the surge so far, it would not be an odd position even if a gap correction emerges," adding, "Conversely, the KOSDAQ has been sidelined for too long, so it would not be at all strange even if a rebound appears."
