KOSPI Falls Below 6,500 as Foreigners Sell; Supply-Demand Pressures and External Uncertainty Weigh Despite Semiconductor Boom

On October 12, the domestic market continued to set new intraday lows. The KOSPI fell about 2.5%, slipping to the 6,450 level, while the KOSDAQ dropped more than 3% to around 850. The won-dollar exchange rate edged lower to 1,335, but buyers remained hard to find in the stock market.

Foreign investors sold a net 860 billion won worth of shares on the KOSPI market, extending their selling streak to five consecutive trading sessions. Foreign and institutional investors both sold on the KOSDAQ, while foreign net selling in the futures market was in the 270 billion won range. Futures selling eased somewhat, but there was no clear buying interest in either cash or futures.

U.S. inflation data and corporate earnings announcements are concentrated this week. The September U.S. Consumer Price Index is due on Wednesday and the Producer Price Index on Thursday, while the Federal Reserve's Beige Book will also be released. The annual meetings of the Bank of Korea, IMF and World Bank, earnings from U.S. financial firms, results from ASML and TSMC, and Friday's U.S. options expiration are also expected to affect markets.

AMD CEO Lisa Su and executives from Meta, ARM and Nvidia are scheduled to attend the OCP Global Summit on Monday. Tuesday's calendar includes U.S. existing-home sales and France's deliberations on its 2027 budget, while Apple's unveiling of a smart-home hub is also in focus. Tesla's event related to its next-generation robotaxi was postponed due to bad weather and is now expected to take place this week. The International Energy Agency will discuss details of a G7 strategic oil reserve release.

Reports cited conflicting figures of $50 billion and $70 billion for OpenAI's annualized revenue at the end of September. Some interpreted the figures as evidence of a sharp revenue decline, but the main source of the discrepancy was an accounting difference: whether sales through cloud partners were recorded on a gross basis or only the portion attributable to the company was recorded on a net basis.

As private companies, OpenAI and Anthropic do not publish financial statements, leaving investors reliant on unofficial data and media reports. The Financial Times revised a related article, while Bloomberg reported that OpenAI's revenue could be around $70 billion under a different calculation method as well. With the accounting basis unsettled, the revenue figures added to market confusion.

The market linked lower revenue estimates to concerns about AI companies' financial capacity and the possibility of slower data-center investment. Those concerns spread to Nvidia, Micron and U.S. semiconductor stocks, deepening losses in related shares. Sentiment toward semiconductor stocks did not recover immediately even after the reports were corrected.

Kim Dong-won, head of research at KB Securities, pointed to the possibility of a re-rating, citing Samsung Electronics' potential for world-leading operating profit and increased shareholder returns. The report forecast operating profit of about 11.4 trillion won for the next quarter, including roughly 11.3 trillion won from the memory division. It also noted the possibility that HBM4 could drive up average DRAM selling prices from the first quarter of next year.

Kim Sun-woo, an analyst at Meritz Securities, forecast SK Hynix's operating profit at about 8.1 trillion won this quarter. Rising prices and improved profitability could lift earnings, and the analyst projected a possible sharp increase in DRAM prices in the first quarter of 2027. The extent to which SK Hynix's operating margin will rise was also cited as a key point of market focus.

Brokerages have maintained a positive outlook for the memory industry, and one report set a 600,000-won price target for Samsung Electronics. However, favorable earnings expectations have yet to translate into share-price gains. Foreign investor flows and macroeconomic uncertainty are weighing more heavily on short-term share prices than earnings or price targets.

Exports from October 1 to 10 totaled $26.1 billion, up 102% from the same period a year earlier and a record high. After adjusting for two additional working days, average daily exports were still up 28.5%. Semiconductor exports during the period reached $12.2 billion, an increase of more than 170% year over year, accounting for 46.7% of total exports.

Semiconductor exports fell from $16.5 billion in September 1–10 to $12.2 billion in the same period in October. However, given that the number of working days dropped from 8.5 in September to 5.5 in October, average daily exports were interpreted as having risen. A broadcaster's simple estimate based on this puts full-month semiconductor exports in October at about $65 billion, above September's record of $60.3 billion.

Memory export prices diverged by product. DRAM export prices rose 4.4% from the previous month, and NAND flash prices were also reported to have increased, but overall memory prices fell about 7.5%, reflecting the impact of DRAM modules and HBM. Rather than drawing conclusions from short-term figures alone, it is necessary to assess prices and export trends by product.

AI data-center investment was described as an industry trend that could generate demand not only for semiconductors but also for power generation, power plants, cables and ship engines. In South Korea, emphasis was placed on SK Hynix's long-standing preparations for HBM, which helped it secure a leading position, as well as Samsung Electronics' long history of semiconductor investment. Plans to pursue the Yongin semiconductor cluster alongside a cluster in the Honam region were also cited as examples of expanded investment.

Battery-related stocks rose early in the session as expectations for growth in the U.S. energy storage system (ESS) market came into focus. The outlook was underpinned by expectations that demand for energy storage will increase as power quality and supply reliability become more important. There was also optimism that domestic companies with production bases in North America could benefit from an increase in future orders.

LG Energy Solution held slightly above flat even as the index fell more than 3%, while Samsung SDI was also little changed, trading slightly lower. Expectations that LG Energy Solution's earnings had bottomed out and could recover supported sentiment. However, Chinese lithium carbonate futures prices fell close to the daily limit down, prompting battery-material and cell-related stocks to give up their intraday gains and turn lower.

The U.S. September Consumer Price Index and Producer Price Index are due this week. The market expects a month-over-month increase of about 0.6% in consumer prices, while UBS forecasts about 0.5%, reflecting higher energy prices. Core CPI is expected to rise at a more moderate pace than headline inflation, with the market forecasting about 0.2% and UBS about 0.19%.

There are concerns that rising oil prices could push inflation data above expectations. The likelihood of an immediate Fed rate hike is priced in as low, and the probability of the policy rate remaining unchanged was reported to be above 80%. However, a higher-than-expected inflation reading could revive concerns about another rate hike by year-end and push up long-term yields on 10-year and longer-dated Treasuries.

The market is paying particular attention to the trajectory of core inflation within the CPI report. Caution has been expressed that a negative data surprise could have a greater impact if the stock market has not fully priced in inflation risks. Remarks by the Fed chair and the Beige Book, both due before the start of the blackout period for Fed officials' public comments, could also affect expectations for monetary policy.

President Trump announced that Russia and Ukraine had agreed to an energy ceasefire, but Ukrainian President Volodymyr Zelenskyy said he had heard nothing about it. Ukraine later said it would agree to a ceasefire if Russia did. Confusion over the credibility of the announcement and whether an agreement had actually been reached added to uncertainty in energy markets.

The United States eased sanctions on Russian fuel, allowing imports. The move was interpreted as an effort to reduce the burden of domestic fuel prices on election sentiment, but it also raised questions about the lack of sufficient coordination with Europe and the consistency of sanctions on Russia. Analysts also said growing public dissatisfaction in the United States over higher energy prices had made the Trump administration sensitive to stabilizing oil prices.

WTI traded around $90 a barrel. Goldman Sachs said the reasons prices had not fallen easily despite news of a recovery in supply included visible inventories at their lowest levels since 2017 and a high geopolitical risk premium. The average risk premium for Brent crude in September was reported at $22 a barrel, the second-highest on record.

Tensions between Saudi Arabia and Yemen's Houthi forces escalated in the Middle East, and drone attacks on airports were also reported. The Houthis threatened to target areas other than Mecca and Medina, while Saudi Arabia's response and the possibility of U.S. support were also cited as variables. Analysts said oil would be difficult to stabilize through Russian fuel imports or strategic reserve releases alone if geopolitical risks in the Middle East remained elevated.

A psychologist explained that it is important to distinguish between an “evil person” and a “malicious person.” The judgment that someone is evil can vary depending on the law, social and cultural norms, and the context of the time, while “malicious” describes a disposition to take pleasure in choices that harm others. The psychologist said it is necessary to distinguish between someone who has committed a bad act and someone who enjoys others' suffering itself.

The psychologist cited research on sadism in which participants chose an option that caused more suffering to another person even though an alternative offered a greater reward. Such people find the action more appealing when they see the victim's distress, and may justify bad behavior as more honest or authentic. The psychologist added that parents and childhood experiences play an important role in the development of these traits.

The psychologist said some researchers analyze Trump as a figure who seeks to demonstrate, through his own will, the changes and instability of nature to others. The psychologist also cited the phrase “deliberately impulsive” as a trait that repeatedly appears in analyses by various psychologists. The explanation was that such a person carefully calculates the other party's immediate reaction—such as pain or fear—while giving little thought to the longer-term consequences that follow.

The psychologist said that when narcissism is added to this mix—a belief that one is exceptionally capable and superior—the person's behavior becomes difficult to predict. When dealing with an impulsive person in power, the psychologist advised against responding immediately to the substance of what they say and recommended delaying a response to observe their hand. However, one should not wait so long that the other person feels ignored; the psychologist suggested leaving a gap and responding around the seventh or eighth turn out of ten.

Lee Kwang-soo said that export figures, prices and corporate earnings showed no clear signs of trouble in the domestic semiconductor industry. Yet he judged that a market decline without an obvious reason was harder to navigate than a rise or fall with a clear cause. In his view, corporate earnings can be reflected in share prices only after the uncertainty surrounding the market—war, oil prices, inflation and interest rates—has eased.

He cited supply-demand pressures as the direct cause of the weakness. Samsung Electronics' share buyback was effectively complete, and SK Hynix's buyback was nearing its end, reducing the buying support that had helped limit declines. Macroeconomic uncertainty was making foreign investors hesitant to buy domestic equities, while the historical supply overhang likely to meet the KOSPI on the way up was also encouraging investors to wait on the sidelines.

Lee Kwang-soo said the fact that Korean stocks are cheap alone is not enough to attract buyers. Confidence is needed that the market is temporarily discounted rather than structurally undervalued, and he argued that companies, policymakers and investors all have a role in restoring that confidence. Citing South Korean companies' capabilities in semiconductors, power, batteries and shipbuilding, he stressed that the Korean market should not be confused with a low-quality market simply because it is undervalued.

Lee Kwang-soo expressed reservations about remarks by former Bank of Korea Governor Lee Chang-yong cautioning about the sustainability of the semiconductor boom. He argued that anyone could make a conditional forecast that competition might change if China acquired advanced equipment or developed its own technology, and that there was no need to overturn investment decisions based solely on the statement that it was unclear when the boom would end. Even if companies had not accurately predicted the boom, he said, SK Hynix's preparations for HBM and Samsung Electronics' long-term investment had laid the groundwork for real results.

Lee Kwang-soo agreed that a semiconductor boom alone could not solve structural problems such as real estate, education and concentration in the Seoul metropolitan area, but said simple solutions such as regional quotas for universities should be approached with caution. He viewed SK Group Chairman Chey Tae-won's position that the Yongin and Honam semiconductor clusters should be pursued together as an example of companies continuing to invest. He also argued that policymakers should consider measures to support the stock market, given the particularly weak performance of the domestic market among major global markets in the second half of the year.