The KOSPI index fell more than 6% on concerns over increased regulations on artificial intelligence (AI) data centers following the U.S. midterm elections. The index initially dropped over 8%, triggering a circuit breaker and falling below the 5000 mark, but managed to recover some losses in the afternoon, closing just above that threshold. Foreign investors sold off more than 2.7 trillion won, leading the decline in major semiconductor stocks.
According to the Korea Exchange, the KOSPI closed at 5059.69, down 324.11 points (6.02%) from the previous trading day. This marked a two-day decline of 10.98%, or 624.11 points, from the closing price of 5683.80 on November 4.
The KOSPI opened at 5263.26, down 2.24%, but quickly fell to the 4900 range as selling pressure surged. A first-stage circuit breaker was triggered at 9:03:33 AM, halting trading for 20 minutes. This was the 11th circuit breaker activation this year and the 17th in history.
During the day, the index dropped to 4911.28, falling below 5000 for the first time in nine months since February 6. Even after trading resumed, selling continued, prompting a sell-side circuit breaker in the KOSPI market. However, afternoon trading saw some bargain hunting, which reduced the decline to around 6% by the close.
In terms of market dynamics, foreign selling was particularly pronounced. Foreign investors sold a net 2.7691 trillion won in the stock market, while institutions and individuals bought a net 1.7042 trillion won and 601 billion won, respectively.
Most of the top market capitalization stocks fell. Samsung Electronics dropped 6.35%, while SK Hynix plummeted 10.44%. Other notable declines included SK Square (-10.51%), Samsung Electro-Mechanics (-7.84%), Hyundai Motor (-4.77%), KB Financial (-3.82%), and LG Energy Solution (-2.46%). Samsung Biologics (-0.26%) and Celltrion (-1.86%) experienced relatively smaller declines.
The KOSDAQ index also fell, closing at 644.27, down 34.14 points (5.03%). A sell-side circuit breaker was briefly activated due to program selling at the start of trading.
In the KOSDAQ market, individuals and foreigners sold a net 110.6 billion won and 101.4 billion won, respectively, while institutions bought a net 205.8 billion won. Stocks such as EcoPro (-6.89%), EcoPro BM (-7.36%), and Alteogen (-5.20%) saw significant declines, along with JUSUNG Engineering (-9.48%), IOTech (-7.80%), and Rino Technology (-7.36%).
The sharp decline in the domestic stock market is attributed to concerns over stricter regulations on the AI industry following the U.S. midterm elections. With the Democratic Party controlling both houses of Congress, fears have grown that regulations related to data centers will tighten, potentially slowing investments in AI infrastructure by global tech giants.
On November 5, NVIDIA's stock fell 9.3% on the New York Stock Exchange, while Micron and SanDisk dropped 17.5% and 22.3%, respectively. The Philadelphia Semiconductor Index fell 12.25%, reflecting widespread selling in the semiconductor sector.
Lee Kyung-min, a researcher at Daishin Securities, stated, "The main reason for the domestic stock market's plunge is the heightened concerns over AI data center regulations following the U.S. midterm elections. The sharp declines in U.S. semiconductor companies reflect worries about a slowdown in AI infrastructure investment, which has spread to the domestic semiconductor and related value chains."
* This article has been translated by AI.
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