Analysis of Major Market Declines Over 36 Years: Average Drop of 45.5%, Recovery in 32 Months

◆Aju Economic Major News
▷[Issue & Analysis] Analysis of Major Market Declines Over 36 Years: Average Drop of 45.5%, Recovery in 32 Months
- The KOSPI index fell nearly 40% from its peak of 9,114.55 on June 22 to 5,469.47 on October 26, erasing gains made earlier this year, with a market capitalization decline of approximately 299 trillion won over four months.
- An analysis of seven major market crashes since 1990, where the KOSPI dropped more than 20%, revealed an average decline of 45.5%, with the largest drop occurring during the 1997 IMF crisis at 72.5%.
- Historically, it took an average of 32 months for the KOSPI to recover to its previous peak after major declines. The recovery period varied significantly, taking just five months during the COVID-19 pandemic, while it took 67 months during the European debt crisis.
- The current market decline is attributed to the burden of stock price discounts due to global interest rate hikes and concerns about the sustainability of investments in AI infrastructure by major tech companies. Analysts suggest that the extent of the decline has exceeded historical averages, making it difficult to predict a bottom.
- Lee Kyung-min, a researcher at Daishin Securities, forecasts that despite external challenges and recurring fears of overselling, the downward trend may stabilize and normalize by November. He estimates the KOSPI could range between 5,200 and 8,200 in 2027, with a possibility of recovering to near previous highs in the first half of next year.

◆Major Reports
▷Anthropic Revives AI Investment Sentiment, Next Focus on SK Hynix [Daishin Securities]
- Following the release of Anthropic's S-1 related to its IPO, concerns about AI investment profitability have eased, leading to a recovery in investment sentiment focused on semiconductors. Anthropic reported revenues of $16.29 billion and an operating profit of $970 million for the second quarter of 2026.
- SpaceX is pursuing a $40 billion financial lease agreement to secure next-generation GPUs from NVIDIA, while Meta announced plans to issue up to $95 billion in stock to expand its AI infrastructure investments, reflecting growing expectations for sustained demand in AI infrastructure.
- Anticipation surrounding SK Hynix's earnings report and additional shareholder return policies has increased, with foreign investors engaging in net buying of both spot and futures, contributing to a rise in the domestic stock market. Trading volume reached 15.3 trillion won, up from the previous day.
- South Korea's GDP for the third quarter grew by 1.0% compared to the previous quarter and 3.4% year-on-year, driven by increased domestic investment, particularly in facilities, and strong semiconductor exports, indicating robust fundamentals centered around semiconductors.
- By sector, semiconductor stocks such as Samsung Electronics (up 4.2%) and SK Hynix (up 5.2%) showed overall strength, although concerns about funding burdens and profitability due to large-scale AI investments remain significant challenges.

◆Major Announcements After Market Close (27th)
▷Woojine Tech (Correction) Suspension of Transactions with Client
▷PI Advanced Materials Preliminary Earnings Report (Public Disclosure)
▷Green Plus Designated as a Short Selling Hot Stock (Short Selling Ban Applied)
▷Mega Study Education Designated as a Short Selling Hot Stock (Short Selling Ban Applied)

◆Fund Trends (As of 26th, Excluding ETFs)
▷Domestic Equity: -52.5 billion won
▷Overseas Equity: +2.3 billion won

◆Key Schedule for Today (28th)
▷FOMC
▷OpenAI DevDay Exchange
▷Earnings Reports from SK Hynix, Alphabet (GOOGL), and Microsoft (MSFT)

* This article has been translated by AI.