Seoul stocks closed sharply lower on Thursday, with the KOSPI and KOSDAQ each falling around 5 percent, after concerns over potential AI data center regulations triggered by a U.S. 'blue wave' (a Democratic Party landslide in the midterm elections) led to sell-sidecars being activated alternately on the two markets.
The KOSPI fell 300.00 points, or 5.28 percent, from the previous session to close at 5,383.80. It dropped as much as 6.10 percent intraday to 5,336.88. Foreign investors sold a net 3.39 trillion won worth of shares, while individual and institutional investors bought a net 2.27 trillion won and 845.7 billion won, respectively.
The closing price on this day is 4,001.79 points (42.64%) lower than the all-time high of 9,385.59 recorded on June 19. It has significantly exceeded the standard threshold of a 20% drop from the peak, which is typically considered indicative of a bear market.
The closing level was 4,001.79 points, or 42.64 percent, below its all-time high of 9,385.59, reached on June 19. The decline far exceeded the commonly used threshold for a bear market, defined as a drop of more than 20 percent from a recent peak.
Samsung Electronics closed at 201,500 won, down 7.57%. During trading hours, it fell to 199,800 won, dropping below the 200,000 won range. SK hynix ended at 1,264,000 won, a decrease of 9.46%. Among other top market capitalization stocks, Samsung Electro-Mechanics (-15.34%), SK Square (-10.01%), Samsung Electronics Preferred Shares (-6.58%), and LG Energy Solution (-2.54%) showed weakness. Conversely, Celltrion (7.50%), KB Financial Group (3.63%), Hyundai Motor Company (3.53%), and Samsung Biologics Logistics (1.67%) showed strength.
KOSDAQ closed at 678.41, down 36.54 points (5.11%). Retail investors made net purchases of 172 billion won, while foreign investors and institutional investors made net sales of 73.4 billion won and 102.6 billion won, respectively.
Earlier, the Korea Exchange triggered a sell-side sidecar in the KOSPI market at 10:16 a.m. on this day. This is the 56th sidecar in the KOSPI market this year and the 29th in the selling direction. At 2:27 p.m., a sell-side sidecar was also triggered in the KOSDAQ market. This is the 35th sidecar in the KOSDAQ market this year and the 16th in the selling direction.
In the U.S. midterm elections held on Wednesday (local time), the Democratic Party secured a majority of seats in both the Senate and the House of Representatives. Meanwhile, major indices in the U.S. stock market rose while semiconductor stocks weakened. Although election uncertainty has been resolved, concerns over restrictions on new data center permits have emerged as Democratic candidates won in Texas, Georgia, and Ohio, which are considered key data center regions within the United States.
The key issue is whether the drop in oil prices and changes in U.S. policy resulting from the Blue Wave will translate into buying pressure in other sectors. Yang Hyeon-gyeong, a researcher at iM Securities, stated, "While selling pressure on large-cap semiconductor stocks continues, expectations of reduced cost burdens due to falling oil prices are spreading to aviation and transportation. It is necessary to check whether rotational trading will appear in sectors other than semiconductors."
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