KOSPI Plunges 5.3% as Samsung, SK Hynix Slide on US Data Centre Regulation Fears

South Korea’s benchmark KOSPI tumbled 300 points, or 5.28%, to close at 5,383.80 on Thursday, as foreign investors sold heavily out of chipmakers on concern that a Democratic Party sweep of the US midterm elections could lead to tighter regulation of AI data centres, the Korea Herald reported, citing Yonhap. The index opened 1.82% lower and slid further, with a sell-side sidecar triggered at 10:16 a.m. that halted program trading for five minutes.

The tech-heavy KOSDAQ fell 36.54 points, or 5.11%, to 678.41, according to Korea JoongAng Daily, which said a sidecar was also activated on that market at about 2:27 p.m. The Seoul Economic Daily said the KOSPI’s close was its first below 5,400 this year since April, and that the KOSDAQ dropped under 700 for the first time since July 30.

Foreign investors lead the sell-off

Foreigners were net sellers of 3.39 trillion won worth of shares on the main board, while individuals bought a net 2.28 trillion won and institutions 841.8 billion won, the Korea Herald said. JoongAng Daily put foreign net selling slightly higher at 3.43 trillion won. Turnover reached 256.8 million shares worth 22.6 trillion won (US$16.8 billion), with losers outnumbering gainers 534 to 344. The won closed at 1,342.1 per US dollar at 3:30 p.m.

Citing Korea Exchange data, the Seoul Economic Daily reported that about 70% of net foreign selling was concentrated in Samsung Electronics and SK hynix. Kim Seok-hwan of Mirae Asset Securities told Yonhap that regulation fears were “stoking a foreign sell-off.”

Chipmakers bear the brunt

Samsung Electronics lost 7.57% to 201,500 won after briefly dipping below 200,000 won for the first time in more than three months, JoongAng Daily said. SK hynix sank 9.46% to 1.26 million won, Hanmi Semiconductor fell 9.13% and Samsung Electro-Mechanics plunged 15.34%, according to the Korea Herald. Hanwha Aerospace and SK Innovation also dropped more than 7%.

Some sectors gained. Naver rose 8.26%, Kia climbed 5.22% and Hyundai Motor added 3.53%, the Herald reported. The Seoul Economic Daily said the KOSPI’s drop was steeper than falls of 1.79% in Japan’s Nikkei 225 and 3.20% in Taiwan’s Taiex. JoongAng Daily noted the KOSPI is now more than 42% below its June 19 peak of 9,385.59, and cited a Goldman Sachs estimate that about 45% of planned new US data centre capacity could face temporary project suspensions.

What’s next

Several local analysts said the reaction may be overdone. Lee Jin-woo of Meritz Securities told the Seoul Economic Daily the effect was “psychological rather than fundamental,” while Shinyoung Securities’ Kim Hak-kyun said investors should wait for quarterly earnings and watch Oracle’s December results. Kim Dae-jun of Korea Investment & Securities told JoongAng Daily the market’s direction would turn only after Anthropic’s listing and strong earnings and guidance from Nvidia. The new Democratic-majority Congress takes control in January, the Herald said.

#businessnews