KOSPI Rebounds More Than 1% After Battle Around 5,000… AI Investment Concerns and Policy Response to Determine Direction

KOSPI fell below 5,000 in early trading, sliding to around 4,990, but later recouped its losses to stand at 5,144 points, up 1.5%. At one point during the session, gains exceeded 2%. KOSDAQ rose 1.8% to 656 points.

Foreign investors continued to sell in the spot market. They sold more than KRW 600 billion on the Korea Exchange and more than KRW 100 billion on KOSDAQ, while buying futures. After net purchases of more than KRW 1 trillion in futures late Friday, foreign investors bought nearly KRW 600 billion during the session on Monday.

Although markets rebounded after the sharp decline, analysts said the recovery was weak relative to the losses and lacked a clear catalyst. Taiwan's TAIEX rose around 5.8% on expectations of intervention by its National Stabilization Fund, while Japan's Nikkei gained more than 3.3%. The Shanghai Composite rose more than 0.4%.

This week’s schedule includes TSMC’s October revenue report, CoreWeave’s earnings, the expiration of Korean options, and a U.S. 30-year Treasury auction. MSCI’s semiannual review is also due, with any changes taking effect on November 30.

Reports of allegations concerning Nvidia CEO Jensen Huang’s personal life drew market attention as they extended to the company and its China-related export issues. According to the reports, U.S. intelligence agencies are investigating the whereabouts of Nvidia chips and a Singapore-based company run by a woman said to have been involved with Huang. The investigation is reportedly examining possible links to China’s Ministry of State Security, citing the company’s substantial assets relative to its size and the difficulty of verifying its background.

Madison Huang’s planned attendance at Nvidia AI Day Seoul 2026 was canceled for family reasons. Nvidia’s board also decided to conduct an investigation involving outside counsel into possible leaks of internal information or involvement in efforts to circumvent restrictions on exports to China. As the allegations remain under investigation, key questions include whether chips or technology were actually leaked and whether Huang was aware of any such activity.

The matter has prompted speculation that it could expand into the U.S.-China technology conflict, amid attention to Jensen Huang’s political donations and the timing of the reports ahead of the midterm elections. Nvidia reportedly donated 1.5 to 1.6 times as much to Republicans as to Democrats. If U.S. export controls on China become more stringent, semiconductor companies such as SK hynix, which is awaiting approval to bring equipment into its manufacturing facilities in China, could also be affected.

Nvidia shares fell more than 3% in U.S. premarket trading. AI-related stocks have rebounded after recent sharp declines, but have recovered less than half of their losses. Further declines in Nvidia shares could weigh on market sentiment. With Nvidia set to report earnings next week, the progress of the investigation and management’s response have emerged as factors affecting the stock.

Anthropic is reportedly preparing to go public and plans to begin investor roadshows on November 13. According to the Financial Times, the company is aiming to list before U.S. Thanksgiving on November 26. Market estimates of its valuation span a wide range, from $1.1 trillion to $1.75 trillion.

OpenAI’s valuation of about $1.1 trillion in its latest fundraising round has become a benchmark for whether Anthropic can command a higher valuation. Some market participants see around $1.5 trillion as a midpoint, while others believe a valuation of roughly $1.7 trillion is possible. Anthropic could delay the offering if the proposed listing price falls short of expectations, but if the IPO is called off altogether, doubts about the growth prospects of AI companies could deepen.

Anthropic has raised its quarterly revenue forecast twice, reportedly narrowing the gap between annual revenue and spending. The company is also said to be preparing to launch a new model. The IPO’s success will depend not only on the valuation but also on how persuasively the company can present its revenue growth and cost burden to investors.

The first public listing by a frontier AI company could indicate how much capital the AI industry can attract in practice. As the performance of model developers feeds into cloud providers’ computing investment and memory demand, Anthropic’s IPO results are expected to affect investment sentiment across the broader AI ecosystem.

The CEO of CoreWeave wrote to the governor-elect of Texas, welcoming his support for protecting quality of life in local communities and his position that already-permitted data center projects should be allowed to proceed to completion. The CEO also said the company would cover the cost of substations and transmission upgrades needed to connect new facilities to the power grid, rather than passing those costs on to nearby households.

CoreWeave’s business model involves borrowing to build data centers and then leasing them to customers for revenue. If construction is delayed or halted, loan repayments remain on schedule while rental income is pushed back, potentially creating a funding gap. The concern is that delays to data center projects could become a matter of liquidity and even survival for the company, rather than simply slowing its growth.

In the United States, opposition is growing to data centers being built without prior notice to residents, adding to concerns over electricity and water costs as well as noise. Power, water, noise, environmental impact, labor conditions, and community engagement have been cited as issues the industry must address with local communities. Companies including OpenAI have also said they will work with communities, leaving investors to watch whether regulation will take shape by adjusting project requirements rather than halting projects.

Reports of some adjustments to Microsoft’s investments should not necessarily be taken as evidence of a broader pullback in AI infrastructure spending, analysts said. Some computing resources allocated to Oracle were based on older chips, or construction delays reduced the amount ultimately payable, suggesting the changes were more about efficiency management than abandoning investment. Still, the market is looking for confirmation that data center construction is proceeding as planned and translating into customer leases and revenue.

The U.S. Consumer Price Index for October is due Tuesday, followed by the Producer Price Index on Friday. Markets are watching how inflation could affect the interest rate path. Several Federal Open Market Committee members are also scheduled to speak this week, making policymakers’ views on December rates another variable alongside inflation.

The probability of a December rate hike cited during a broadcast rose as high as 84%, fell to around 67%, and then climbed again, fluctuating sharply. Figures subsequently cited put it at around 80%. With rate expectations unsettled, the CPI reading and comments from Fed officials could add to market volatility.

In South Korea, the unemployment rate and export data are due on November 11. With markets also focused on AI company earnings and progress on data center projects, it may remain difficult to gauge the direction of share prices based on macroeconomic data alone.

The government held an F4 meeting last Friday to review market conditions and decided to waive for three months securities firms’ requirement to maintain a 140% collateral ratio on margin loans. Previously, if an investor borrowed KRW 10 million from a securities firm to buy shares, the firm could demand additional collateral if the value of the pledged shares fell below KRW 14 million. The measure allows securities firms to adjust collateral ratios and their application at their discretion, easing pressure from forced liquidations.

The duration, ratio, and application procedures may vary by securities firm, so investors using margin loans should check each firm’s guidance. The measure is not expected to eliminate a large volume of forced selling, but aims to slow the chain reaction in which automatic sales after a sharp decline trigger further losses.

Reports said the November 11 emergency meeting of economy ministers could discuss measures including a market stabilization fund and a short-selling ban. A short-selling ban could be considered alongside issues such as market accessibility and inclusion in the MSCI Developed Markets Index. A market stabilization fund is structured to raise resources through contributions from financial institutions and others, rather than holding cash ready for immediate deployment.

Taiwan decided to deploy its National Stabilization Fund after the sharp decline, with the amount cited at 500 billion New Taiwan dollars, or more than KRW 20 trillion. A statistic was also cited showing that stocks had risen one month after a fund intervention in 77.7% of cases. Markets are watching how clearly South Korean authorities specify the actual buying capacity and timing of any further measures.

The lower ends of index forecasts that securities firms have begun publishing are based mainly on the price-to-book ratio (PBR). If a KOSPI PBR of around 1 is viewed as a lower bound close to liquidation value, a range of roughly 4,800 to 5,500 could be cited, and some argue the market is already approaching that level. However, the PBR has fallen as low as 0.8 during major crises in the past, so this cannot be treated as a definitive bottom.

There is no single number that can define a bottom for all investors, given differences in their holdings, investment horizons, and capacity to withstand losses. Rather than trying to predict the bottom in advance, it is important to decide how to respond if share prices fall further. Reducing some holdings to secure cash may be an option, but it should be distinguished from selling everything and leaving the market.

There is a difference between an investor who has planned to withstand a decline and one who is unable to sell as losses mount. Investors should review their goals and investment horizon and ask whether they have actively decided to hold or are simply postponing a decision to sell. One account recalled experiencing the subprime crisis shortly after moving into an analyst role in 2006, and said that the feeling of having done nothing during the crisis lingered longer than the falling share prices themselves.

Investors should avoid borrowing or increasing leverage to make up for losses. They need to reassess how much further decline they can withstand and make a plan to adjust their positions if predetermined thresholds are reached. The central view is that recovery in the South Korean stock market may take time, but investors should prepare for opportunities on the assumption that a recovery will come.

Inclusion in a market stabilization fund and inclusion in the MSCI Developed Markets Index can both be important objectives, but authorities need to prioritize what is urgent during a sharp selloff. MSCI inclusion is a medium- to long-term goal, whereas responding to abrupt volatility is an immediate task. The fact that a meeting is scheduled is not enough; the timing and substance of measures that the market can feel are what matter.

The market is a space in which companies and governments participate alongside investors, so there is no reason to rule out government intervention, the argument goes. As in Taiwan, where a stabilization fund was deployed quickly after a meeting, swift and unexpected action during a sharp downturn can affect investor sentiment. Even if a market stabilization fund does not immediately begin buying, it can signal that the government and financial sector are willing to support the market.

Some argue that, beyond measures on margin loans, authorities could review futures trading practices that amplify market volatility, trading involving spot and inverse ETFs, and possible violations of short-selling rules. China’s use of various tools was also cited, including encouraging companies to buy back their own shares, providing low-interest loans, and easing restrictions on institutional fund management. The argument is that policymakers should make clear their priorities between market stability and compliance with international standards, and set out specific measures to address a sharp decline.