U.S. stocks had dropped overnight, with the Dow Jones Industrial Average falling 620 points and the Nasdaq 240, as a correction in technology shares and a slump in Broadcom soured sentiment across the chip complex, while the framework to reopen the Strait of Hormuz appeared to deadlock.
The decline, however, was anything but broad. More stocks rose than fell on the main board, the KOSDAQ climbed 2.0 percent to around 1,047, and the large-cap KOSPI 200 fell 2.7 percent, a steeper drop than the broad index, a divergence that located the selling squarely in the mega-cap chip and AI names that had led the rally.
Samsung Electronics fell 2.6 percent to 351,000 won ($229.6) and SK Hynix shed 73,000 won to 2,287,000 won, tracking the overnight weakness in US semiconductors, while the recent high-flyers fell hardest: LG Electronics dropped 11.3 percent to 348,000 won, Robostar fell 12.0 percent, LG CNS lost 8.2 percent, and Naver gave back 6.2 percent, a sharp unwind of the physical AI trade.
The flip side was a violent rotation into the value names that had stirred earlier in the week. Non-life insurers led, with Samsung Fire & Marine Insurance surging 15.4 percent, while Samsung Heavy Industries gained 8.7 percent as shipbuilders firmed, SKC rose 8.9 percent, and Mirae Asset Life Insurance added 4.9 percent.
The pattern was the mirror image of the rally that built the record: money fled the crowded AI and chip trade and flowed into Korea's long-discounted cyclicals and financials, leaving the index lower even as the broader market advanced.
Foreign investors resumed selling, net sellers of around 806 billion won in early trade, while domestic retail investors did the bulk of the absorbing with 712.9 billion won in net buying and institutions added a further 85.6 billion won, the same domestic-demand pattern that has cushioned the market through the spring.
The South Korean won traded at around 1,528.9 against dollar, weakening from 1,504.5 at the start of the week and reversing Monday's gains. The weaker won kept imported inflation concerns in focus, with the dollar index climbing back toward 99.5 and oil prices supported by renewed uncertainty over the Strait of Hormuz.
Across Asia, Japan's Nikkei 225 reversed part of Wednesday's record surge, falling about 1.0 percent to around 67,734 in early trade after closing at an all-time high above 68,400 the previous session. Chinese markets had yet to open, with the Shanghai Composite having closed at 4,083.97 on Wednesday.
For South Korea, Thursday's market reopen after the local election holiday will provide an immediate test of whether the sell-off is merely a one-day catch-up to external weakness or the beginning of a deeper correction in a rally that had become increasingly narrow.
For South Korea, Thursday's market reopening after the local election holiday poses an immediate test of whether the post-election session is merely a one-day catch-up to external weakness or the start of a deeper correction in a rally that had become increasingly narrow.
The concentration of the selling tells the more revealing story. With artificial intelligence (AI)-driven chip leaders giving back weeks of gains in a single morning while insurers and shipbuilders rallied, the market is not so much retreating as rotating, away from the names that carried the record and toward the ones left behind by it.
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