KOSPI Slips Below 5,600 as Foreign Selling Grows… Semiconductor Fundamentals and Wavering Investor Sentiment

The KOSPI fell more than 2% during the session to below 5,600, with losses briefly approaching 3%. The KOSDAQ dropped by the high 1% range to around 777. Foreign investors bought shares in the cash market early in the session but later pared their purchases, while selling also emerged in the futures market.

The won continued to strengthen, with the won-dollar exchange rate falling about 2 won from the previous day to approximately 1,324 won. The decline in the exchange rate appeared to accelerate somewhat after remarks by Bank of Korea Governor Shin Hyun-song. Semiconductor-related stocks were weaker in Japan, with Kioxia and Ibiden falling around 6% and Tokyo Electron down about 5%.

The Nasdaq and Philadelphia Semiconductor Index rebounded the previous day, recovering from concerns about an AI bubble, but the domestic market failed to follow suit. KOSPI trading value during the broadcast was reported at 16 trillion to 17 trillion won for the day, far below the 40 trillion to 50 trillion won seen during periods of strong gains. Some linked the recent pattern to the possibility of entering a range-bound market, with trading volumes declining after sharp swings.

KB Securities said the KOSPI had formed a W-shaped bottom after making lows on July 29 and October 15. It forecast a rebound in November and December, citing valuations for the KOSPI, Samsung Electronics and SK hynix that were lower than during the global financial crisis, as well as the possibility that concerns over U.S. 10-year Treasury yields and the sustainability of AI investment could ease. Market participants also noted that declining trading volumes during a downturn may signal reduced selling pressure, while pointing out that a clear source of buying to drive a rebound had yet to emerge.

Nomura maintained its positive outlook for the memory market and expected supply constraints to persist at least through 2028. It said concerns about slower revenue growth among AI companies alone were not enough to conclude that overall demand had weakened. Customer shifts, seasonality and differences in reporting criteria could affect earnings volatility, while new data center capacity continued to grow, exceeding previous forecasts.

Nomura maintained Buy ratings on Samsung Electronics and SK hynix, with price targets of 670,000 won and 4.7 million won, respectively. It viewed expanding cash generation positively and considered concerns about competition from Chinese companies excessive. However, some market participants said the targets could seem hollow because the report offered no new evidence beyond existing forecasts for semiconductor demand and earnings to shift investor sentiment.

JPMorgan removed its previously stated KOSPI forecast of 15,000 from a recent report, saying it was still difficult to find clear evidence that the market had reached a bottom. At the same time, it said there was no problem with semiconductor demand or corporate earnings, and identified supply-demand conditions and investor sentiment as possible obstacles. The different reactions to the Nomura report reflected a gap between its conclusions and market expectations, as investors looked for a catalyst to refocus attention on fundamentals.

The price-to-earnings ratios of Samsung Electronics and SK hynix were cited at around 3 times each. That is low compared with the KOSPI’s long-term average P/E of about 10 times, but justifying those valuations would require a sharp decline in semiconductor companies’ future earnings. Low valuations alone have not been enough to halt short-term selling.

Meta reported quarterly revenue of $64.6 billion, above market expectations. Earnings per share fell short of forecasts, affected by one-off costs including expenses related to lawsuits over adolescent mental health, but the company said EPS would have been $7.40 excluding those costs. Its revenue forecast for the next quarter was also higher than market expectations.

Meta raised the lower end of its full-year capital expenditure guidance to $135 billion. Free cash flow turned negative at $2.1 billion, but was better than the $8 billion deficit expected by the market. The company also unveiled a plan to distribute non-voting Class C shares to existing shareholders. The plan was interpreted as an additional funding avenue, while also drawing concerns that it could dilute shareholder value.

The AI service Muse surpassed 10 million users in North America just six weeks after launch. Meta said it had achieved product-market fit and entered a scaling phase, and was building computing infrastructure to serve more than 1 billion people over the coming years. It also outlined plans to offer basic services free to general users while charging for advanced models and additional tokens, and to generate revenue from shopping transaction fees paid by business customers and more personalized advertising.

The results eased some concerns about cash flow, but the market’s focus was on whether Muse could translate user growth into actual revenue. Some saw potential to monetize AI services by combining consumer platforms with advertising businesses, while constraints on distribution and payment channels—including Amazon blocking Muse—were also cited as a variable. Meta also unveiled Muse Wonder, a next-generation model with coding capabilities.

Tesla’s revenue exceeded market expectations, and gross profit increased 9% from a year earlier. Its gross margin rose 1.6 percentage points to 19.6%. Earnings per share declined from the previous quarter but still beat market expectations.

The company said the number of active FSD subscribers had risen 67% from a year earlier and that 75% of new vehicles delivered in the United States used FSD. Wider adoption of autonomous driving services by subscription could expand recurring service revenue beyond vehicle sales. Further approvals in Europe were also cited as a potential tailwind.

The cumulative mileage of the Cybercab, which operates without a steering wheel or pedals, increased eightfold from the previous quarter, and the company described its annual production capacity as more than 120,000 units. Optimus robots have begun production at the Fremont factory, but remain in the early stages of ramp-up, while a production facility in Texas is under construction. Specific production volumes and the timing of full-scale mass production have not been confirmed.

A facility for AI computing semiconductors is under construction in Austin, with equipment commissioning planned for 2027. Rather than valuing the company solely on vehicle sales and earnings, the market focused on whether FSD, robotics and computing could become future growth drivers. There was also speculation that a separate event on Optimus might be held, but this was presented by the host as conjecture, not as a confirmed plan.

Samsung Electro-Mechanics was named as a key supply-chain partner during Nvidia’s GTC Berlin presentation. Nvidia said it would expand supply-chain production capacity, including increased substrate supply from Samsung Electro-Mechanics and Unimicron. Plans to expand production in packaging and optical interconnects were also mentioned.

Samsung Electro-Mechanics rose early in the session but gave back most of its gains as the broader domestic market weakened. Its participation in Nvidia’s supply chain was seen as an indicator not only of the company’s orders and production capacity, but also of rising demand for AI server components.

Samsung E&A reported results that exceeded expectations, with operating profit coming in at about twice the market forecast. The company raised its annual new-order outlook from 12 trillion won to 19 trillion won and its revenue forecast from 10 trillion won to 11 trillion won. It also lifted its operating profit forecast from around 800 billion won to 1.4 trillion won.

The stock rose more than 15% intraday, and buying spread to other construction stocks. The earnings improvement may have been supported by advanced-industry projects for affiliates such as Samsung Electronics and facility investment related to semiconductor process transitions. Demand for water treatment and advanced facility construction was also expected to contribute to results.

The company also announced plans to cancel treasury shares worth about 780 billion won. The cancellation, valued at more than its quarterly operating profit, boosted expectations for shareholder returns and was cited as a factor behind the sharp rise in the stock. Some said that if share buybacks and cancellations spread beyond semiconductor companies to other industries, they could help strengthen confidence in the domestic market.

New data center capacity worldwide is increasing beyond previous estimates. Even if some companies are seen moderating the pace of investment, it is difficult to interpret that as a halt to data center expansion overall. Nomura’s forecast of continued tight memory supply was also based on this demand trend.

China held a launch ceremony for China Data Group Co., Ltd. The establishment of an organization to promote data center investment in China prompted interpretations that investment in data infrastructure could expand. At the same time, some observers said the likelihood of memory products from CXMT and YMTC reaching markets outside China could decline.

The Bank of Korea’s Monetary Policy Board unanimously kept the base rate at 3%. Governor Shin Hyun-song had earlier said the central bank had acted promptly on rates to absorb shocks, and described the latest hold as “the fruits of having acted early.” The market focused less on the hold itself than on comments about the future path of rates.

The monetary policy statement said the growth outlook had improved substantially from previous expectations. It said consumer and core inflation were broadly in line with earlier forecasts, while inflation next year could exceed the previous outlook. The statement was interpreted as leaving the possibility of future rate hikes open, as stronger growth could add to inflationary pressure.

Governor Shin said inflation could reach the Bank of Korea’s 2% target in 2028. With international interest rates and instability in the government bond market persisting, the extent to which the central bank would emphasize the possibility of a rate hike at future meetings was seen as a key point to watch. The host argued that the Bank should communicate not only through figures but also its readiness to respond flexibly to changes in global financial markets.

An e-petition to the National Assembly surpassed 50,000 signatures. Reaching that threshold does not mean the requests will be accepted; it means the process is advancing so the Assembly can formally discuss the issue. Signatories viewed the petition’s significance as having brought the matter to the starting point of parliamentary debate.

Regarding SK hynix’s plan to list Solidigm in the United States, concerns were raised that, unlike a domestic listing, it would be difficult to block a U.S. listing solely through review of a domestic securities registration statement. Some argued that fines alone might not provide an effective deterrent, making legal review and institutional improvements necessary. However, the remarks did not clearly establish the specific subject of the e-petition or whether it was connected to this issue.

Lee Kwang-soo said recent declines were driven more by uneasy investor sentiment and supply-demand conditions than by any clear deterioration in corporate earnings. Investors who had experienced sharp falls had become more inclined to sell when prices rebounded to reduce losses, creating selling pressure even on up days and limiting gains. He stressed that in a volatile, range-bound market, the sentiment of existing shareholders could move prices more than that of prospective buyers.

He compared Nvidia’s roughly 10% gain over the past year with gains of more than 100% for Samsung Electronics and SK hynix over the same period. However, he said the greater volatility of domestic stocks made investors uneasy and inclined them to shift toward U.S. equities. While lower-volatility assets can provide a sense of psychological security, he said investors should not be excessively pessimistic about the domestic market, given the relationship between volatility and return opportunities.

SK hynix’s plan to list Solidigm in the United States was identified as a headwind for the stock. The argument was that if Solidigm’s value were separated out, value could be removed from SK hynix’s main listing, and a higher U.S. market valuation could widen the gap between the main listing and the U.S.-listed asset. The fact that foreign investors had been net sellers of more than five times the volume bought by individual investors over the past month was also interpreted in connection with these concerns.

Lee criticized the continuation of the listing plan despite opposition from investors, arguing that if authorities lacked direct means of imposing sanctions, legislation and institutional improvements would be needed to prevent similar cases in the future. In the long run, he said, rules and market conditions should be created so companies benefit from listing domestically and can command a premium in the local market. He added that it was time to reconsider whether domestic companies were investing the profits they earned in their long-term business vision and growth.