The index dropped 316.2 points to 7,414.6 within minutes of morning trading, pulling further away from the 8,000 level it had only reclaimed days earlier.
Investors see the world's largest-ever IPO acting as a magnet for global capital, drawing money out of markets such as South Korea, where foreign investors have been net sellers for an extended stretch of weeks, and into a debut that offers one of the year's marquee growth stories.
Foreigners sold a net 196.0 billion won, while domestic institutions and individuals absorbed the selling, buying 81.2 billion won and 112.5 billion won.
The sell-off has hit chipmakers, which are among the most heavily held by foreign investors. SK hynix dropped 4.0 percent to 1,966,000 won ($1,290) and Samsung Electronics fell 4.6 percent to 288,750 won ($190), the most liquid positions in the market and the first to be sold when investors raise cash for a new bet.
Declines swamped the board, with 689 stocks falling against 157 gainers.
Additionally, two shocks have sharpened the retreat, a hotter-than-expected U.S. inflation reading and the prolonged conflict in the Middle East, but neither fully explains an outflow that began well before this week and now appears to be shifting decisively toward Nasdaq-listed assets.
The junior KOSDAQ held up better, slipping 2.9 percent to 923.5, reflecting how concentrated the selling was in the large-cap, foreign-held stocks that are easiest to convert to cash.
It was further fueled by a slightly stronger won, which traded at around 1,524 against the dollar, making dollar-denominated assets more attractive for South Korean investors and encouraging a shift of funds toward the listing.
But the impact was regional. In Tokyo, the Nikkei 225 fell 2.0 percent to 62,901.9, while Chinese markets had yet to open after the Shanghai Composite closed slightly lower on Wednesday, leaving South Korea, the most foreign-dependent market in Asia, the most exposed as capital continues to withdraw.
Whether the outflow eases once SpaceX begins trading or deepens into a broader retreat from Seoul is now the question hanging over the market.
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