Kospi Falls 4 Percent as Chip Selloff Returns to Seoul

Updated 14:55 UTC

The Seoul session has closed. The Kospi ended at 5,552.74, down 215.27 points, or 3.73 percent, from the previous close of 5,768.01, according to Korea Exchange figures reported by the Seoul Economic Daily. Foreign investors sold a net 530.3 billion won and institutions sold a net 1.005 trillion won. Retail investors bought a net 898.9 billion won, but that buying did not hold the index up. Samsung Electronics closed at 211,500 won, down 2.98 percent. SK hynix closed at 1,223,000 won, down 4.23 percent. The Seoul daily also reported SK Square down 5.00 percent, Hyundai Motor down 4.91 percent and LG Energy Solution down 4.17 percent.

In New York, the fund that tracks the Nasdaq 100, QQQ, rose 1.62 percent to 721.27 dollars, a move flagged by our markets watcher. Reuters reported that investors came back to chip and AI linked stocks on Monday after last week's selloff, while they waited for earnings from Meta, Tesla and other big technology firms this week. Seoul moved the other way. Lee Kyoung-min, an analyst at Daishin Securities, linked the weakness to profit taking after the earlier rebound and said concerns over AI investment returns and credit risk are still unresolved, the Seoul daily reported.

South Korea's Kospi fell hard in morning trade on Tuesday, October 20, sliding below 5,700 and then below 5,600 as chip stocks led a broad selloff in Seoul. The drop came even after semiconductor shares rebounded in New York overnight.

The index opened at 5,733.57, down 34.44 points, or 0.60 percent, according to Yonhap. Losses grew fast. By 9:12 a.m. local time the Kospi was trading at 5,647.04, down 120.97 points, or 2.10 percent, from the previous close, according to Korea Exchange figures reported by the Seoul Economic Daily. Later in the morning the fall widened again, and market data services put the index down 4.00 percent at 5,536.97.

The Kospi had closed on Monday at 5,768.01, up 1.76 percent, after rising for two straight sessions. Tuesday's open erased that ground in the first minutes of trade, and sellers kept control through the morning.

Chips lead the fall

SK hynix slid 4.23 percent to 1,223,000 won in early trade, the Seoul Economic Daily reported. Samsung Electronics fell 1.26 percent to 215,250 won. SK Square lost 3.97 percent, Samsung Electro-Mechanics fell 2.91 percent, Samsung SDI fell 2.28 percent, Hyundai Motor fell 1.84 percent and LG Energy Solution fell 1.85 percent.

Foreign investors sold 112.7 billion won of shares and institutions sold 142.9 billion won, the Seoul Economic Daily reported. Retail investors were the only net buyers, at 220.5 billion won. The smaller Kosdaq index fell 1.74 percent to 794.82, dropping below the 800 level after opening at 805.37.

Japan moved the same way, though by less. The Nikkei 225 opened 0.25 percent lower at 64,755.49 and was down 0.77 percent at 64,415.21 in morning trade, TradingKey reported, with SoftBank Group down 3.08 percent.

A rebound that did not travel

Overnight in New York, technology shares recovered from their steepest weekly fall since June. The Nasdaq Composite rose 1.11 percent to 26,430.89, the S&P 500 gained 0.41 percent and the Dow Jones Industrial Average eased 0.07 percent. The Philadelphia Semiconductor Index rose 1.61 percent, its first gain in nine sessions. Micron rose 3.0 percent and Nvidia gained 1.4 percent, though AI infrastructure company CoreWeave gave up early gains and closed down 0.4 percent.

Seoul did not follow. Traders in South Korea are still weighing whether the heavy spending on AI data centers and chips will earn its cost, and how much debt AI infrastructure firms have taken on to fund it. Aju Press reported that those debt concerns, political uncertainty in Europe and sharp swings in New York kept investor sentiment from recovering.

What analysts in Seoul say

Han Ji-young, an analyst at Kiwoom Securities, said the Nasdaq rebound and buying after recent falls support the market, but political uncertainty in Europe and caution before US big tech earnings limit how far it can rise, with sectors moving in different directions. Lee Kyung-min, a researcher at Daishin Securities, said bargain hunting could appear in sectors outside semiconductors, such as secondary batteries, pharmaceuticals, biotechnology and retail, as rate and oil pressures ease.

The Seoul session has now closed. The final figures are in the update at the top of this article.