KOSPI Plummets Amid Meta Shock; Will It Attempt a Rebound?

On July 2, the KOSPI and other indices are displayed on the trading room board at Hana Bank in Jung-gu, Seoul. On that day, the KOSPI closed at 7,648.09, down 655.32 points (7.89%) from the previous trading day, while the KOSDAQ fell 62.63 points (6.74%) to close at 866.72. Samsung Electronics dropped 9%, and SK Hynix fell 14.5%. [Photo: Yonhap News]

The KOSPI index, which recently fell below the 8,000 mark due to concerns over Meta's artificial intelligence (AI) investments, is under scrutiny to see if it will attempt a rebound on July 3. While initial trading is expected to face downward pressure due to the previous night's weakness in U.S. tech stocks, analysts predict that bargain-hunting following the sharp decline may help recover some losses.
In the U.S. stock market, semiconductor and technology stocks continued to struggle. Micron Technology fell by 5.49%, while major semiconductor companies such as Nvidia (-1.39%), Broadcom (-2.41%), AMD (-4.26%), Intel (-5.25%), and Marvell Technology (-9.84%) all experienced declines. Consequently, the tech-heavy Nasdaq index closed down by 0.80%.
As a result of the weak performance of tech stocks on Wall Street, the KOSPI is expected to start lower. According to the Korea Exchange, the KOSPI closed at 7,648.09, down 655.32 points (7.89%) from the previous trading day. The index opened at 7,933.10, down 370.31 points (4.46%), and fell to as low as 7,616.33 during the session, prompting a temporary trading halt due to increased volatility.
The sharp drop was triggered by news that Meta is considering selling its excess AI computing resources through a cloud service, which the market interpreted as a signal of a slowdown in AI infrastructure investment. This led to widespread selling of global semiconductor stocks, with the Philadelphia Semiconductor Index dropping more than 6% in a single day. In South Korea, Samsung Electronics and SK Hynix led the decline, falling by 9.06% and 14.57%, respectively.
However, analysts believe that the significant price drop may attract bargain hunters during the trading session. Han Ji-young, a researcher at Kiwoom Securities, stated, "Today, the domestic market is likely to see increased volatility in semiconductor stocks due to the continued weakness of the Philadelphia Semiconductor Index and the KOSPI 200 futures trading down by over 1%. However, the anticipated easing of the Federal Reserve's interest rate hike outlook for September and the perception of excessive losses from the previous day's 7% drop may lead to a recovery during the session."

* This article has been translated by AI.