The KOSPI and KOSDAQ indices plummeted over 7% on concerns about the profitability of the artificial intelligence (AI) industry, compounded by rising interest rate pressures. During trading, both indices fell by more than 8%, triggering multiple circuit breakers. This marked the first activation of a Level 1 circuit breaker for both indices since late July.
On October 15, the Korea Exchange reported that the KOSPI closed at 5554.27, down 454.59 points (7.57%) from the previous trading day. The index experienced extreme volatility, dropping over 8% at one point, which led to the activation of a Level 1 circuit breaker.
Earlier in the day, the KOSPI triggered a Level 1 circuit breaker at approximately 12:38 PM after falling more than 8%. The KOSDAQ market also saw a circuit breaker activated at around 12:23 PM, halting trading for 20 minutes.
The Korea Exchange activates a Level 1 circuit breaker when either the KOSPI or KOSDAQ indices decline by more than 8% for one minute. When a circuit breaker is triggered, trading is suspended for 20 minutes, and order acceptance is halted, except for canceled orders. After trading resumes, a single price trading session occurs for 10 minutes.
The sharp decline in the stock market is attributed to concerns over the deteriorating profitability of AI companies, alongside rising interest rate pressures. Recently released third-quarter revenue figures from Anthropic showed $16.8 billion, with a growth rate of only 45% compared to the previous quarter. This marked a significant drop from a 140% growth rate in the second quarter, raising doubts about the sustainability of investments in the sector.
Additionally, the U.S. Consumer Price Index (CPI) for September exceeded market expectations, reigniting fears of further interest rate hikes. The credit risk of AI infrastructure companies has also emerged as a new concern, with CoreWeave's corporate bond yields soaring, leading to a 15.5% drop in its stock price. Other companies in the AI value chain, such as Micron and NVIDIA, also saw declines of 4.1% and 3.2%, respectively.
In the securities market, individual and institutional investors purchased a net 21.8 trillion won and 19.6 trillion won, respectively, while foreign investors sold a net 48.1 trillion won. Foreign investors have continued to sell for six consecutive trading days.
Most of the top market capitalization stocks also fell sharply. Samsung Electronics dropped 9.91%, SK Hynix fell 11.06%, SK Square decreased by 10.45%, and Samsung Electro-Mechanics plummeted 15.50%.
The KOSDAQ index closed at 760.82, down 63.06 points (7.65%) from the previous trading day. In the KOSDAQ market, foreign investors bought a net 282.1 billion won, while individuals and institutions sold a net 124.7 billion won and 169.1 billion won, respectively.
All major stocks in the KOSDAQ also showed weakness, with EcoPro down 8.98%, Alteogen down 5.79%, Juseong Engineering down 14.97%, Wonik IPS down 15.47%, and EoTechnics down 10.03%.
Experts predict that volatility in the market will continue for the time being. Han Ji-young, a researcher at Kiwoom Securities, stated, "It may feel uncertain where the bottom is during this period. The upcoming third-quarter earnings season for leading stocks next week will need to address AI concerns once again, and this process is likely to lead to frequent volatility."
On October 15, the Korea Exchange reported that the KOSPI closed at 5554.27, down 454.59 points (7.57%) from the previous trading day. The index experienced extreme volatility, dropping over 8% at one point, which led to the activation of a Level 1 circuit breaker.
Earlier in the day, the KOSPI triggered a Level 1 circuit breaker at approximately 12:38 PM after falling more than 8%. The KOSDAQ market also saw a circuit breaker activated at around 12:23 PM, halting trading for 20 minutes.
The Korea Exchange activates a Level 1 circuit breaker when either the KOSPI or KOSDAQ indices decline by more than 8% for one minute. When a circuit breaker is triggered, trading is suspended for 20 minutes, and order acceptance is halted, except for canceled orders. After trading resumes, a single price trading session occurs for 10 minutes.
The sharp decline in the stock market is attributed to concerns over the deteriorating profitability of AI companies, alongside rising interest rate pressures. Recently released third-quarter revenue figures from Anthropic showed $16.8 billion, with a growth rate of only 45% compared to the previous quarter. This marked a significant drop from a 140% growth rate in the second quarter, raising doubts about the sustainability of investments in the sector.
Additionally, the U.S. Consumer Price Index (CPI) for September exceeded market expectations, reigniting fears of further interest rate hikes. The credit risk of AI infrastructure companies has also emerged as a new concern, with CoreWeave's corporate bond yields soaring, leading to a 15.5% drop in its stock price. Other companies in the AI value chain, such as Micron and NVIDIA, also saw declines of 4.1% and 3.2%, respectively.
In the securities market, individual and institutional investors purchased a net 21.8 trillion won and 19.6 trillion won, respectively, while foreign investors sold a net 48.1 trillion won. Foreign investors have continued to sell for six consecutive trading days.
Most of the top market capitalization stocks also fell sharply. Samsung Electronics dropped 9.91%, SK Hynix fell 11.06%, SK Square decreased by 10.45%, and Samsung Electro-Mechanics plummeted 15.50%.
The KOSDAQ index closed at 760.82, down 63.06 points (7.65%) from the previous trading day. In the KOSDAQ market, foreign investors bought a net 282.1 billion won, while individuals and institutions sold a net 124.7 billion won and 169.1 billion won, respectively.
All major stocks in the KOSDAQ also showed weakness, with EcoPro down 8.98%, Alteogen down 5.79%, Juseong Engineering down 14.97%, Wonik IPS down 15.47%, and EoTechnics down 10.03%.
Experts predict that volatility in the market will continue for the time being. Han Ji-young, a researcher at Kiwoom Securities, stated, "It may feel uncertain where the bottom is during this period. The upcoming third-quarter earnings season for leading stocks next week will need to address AI concerns once again, and this process is likely to lead to frequent volatility."
* This article has been translated by AI.
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