Blue Wave Shock Hits South Korean Stock Market as KOSPI Plummets 5.28%

 
The South Korean stock market was struck by a "Blue Wave Shock" following the Democratic Party's decisive victory in the U.S. midterm elections, raising concerns about stricter regulations on artificial intelligence (AI) data centers that could dampen semiconductor demand. As a result, the KOSPI index fell by more than 5%, dropping below the 5,400 mark. Foreign investors sold off over 3 trillion won in stocks.
 
According to the Korea Exchange, the KOSPI closed at 5,383.80, down 300 points (5.28%) from the previous trading day. The KOSDAQ index also fell by 36.54 points (5.11%), finishing at 678.41. During the trading session, the KOSPI 200 futures plummeted, triggering a temporary halt on program sell orders due to the steep decline. In terms of market participants, foreign investors net sold 34.242 billion won in the securities market. Although individuals and institutions bought 22.722 billion won and 8.457 billion won, respectively, they could not prevent the index from falling.

The sharp decline in the stock market is attributed to the "Blue Wave Shock." With the Democratic Party gaining control of both the House and Senate, the likelihood of reversing policies from the Trump administration has increased. Concerns about restrictions on new facility permits and construction delays have spread, particularly in key data center hubs like Texas and Georgia, leading to a widespread drop in global semiconductor stocks.

In the U.S., Micron Technology fell by 7.00%, while SanDisk dropped by 7.91%. Other companies like Marvell Technology (-7.08%) and NVIDIA (-3.17%) also saw declines. In Asia, Japan's Kioxia plummeted by 13.14%. South Korea was no exception, with Samsung Electronics falling by 7.57% and SK Hynix by 9.46%. SK Square (-10.01%) and Samsung Electro-Mechanics (-15.34%) also recorded double-digit losses, while companies on the KOSDAQ, such as Simtek (-17.97%), IOTech (-16.21%), and JUSUNG Engineering (-12.21%), faced significant declines.
 
Experts suggest that the South Korean stock market is particularly sensitive to declines due to the high weighting of memory semiconductor companies like Samsung Electronics and SK Hynix, which has dampened investor sentiment. However, some analysts predict that the long-term impact on semiconductor demand will be limited.

Hwang Soo-wook, a researcher at Meritz Securities, stated, "The actual demand for memory semiconductor companies' orders in 2027 and 2028 will significantly exceed their supply capabilities, so even with some delays and adjustments, there will be no major changes in the supply shortage situation."