AI spending peak worries and Middle East tension combined to push KOSPI down 3.52% in a single session
🎧 Post Summary
📌 1-Minute Summary
On the 22nd, KOSPI closed at 5,533.77, down 201.89 points or 3.52%. Decliners numbered 709 against 174 advancers. Samsung Electronics fell 4.03% and SK hynix dropped 5.49%, while KOSDAQ lost 3.62% to finish at 764.10. Brokerages pointed to fears that AI investment has peaked, concerns about tighter monetary policy, Middle East anxiety after the US ordered non-essential diplomatic staff out of Saudi Arabia, and a weaker supply-demand cushion now that SK hynix’s share buyback ended the previous day. The won closed at 1,324.2 per dollar, slightly stronger. With Alphabet, Microsoft and Amazon reporting earnings later this month, the market is heading into a key turning point.
One day after a rebound, the market sold off sharply again. KOSPI slid to the low 5,500s on October 22 and closed at 5,533.77. Here is what weighed on the index, and which variables to watch through the end of the month.
KOSPI and KOSDAQ Close: 709 Decliners
KOSPI closed at 5,533.77, down 201.89 points (3.52%) from the previous session. It opened slightly lower at 5,670.11 and tried to rebound to 5,740.28 intraday, but losses widened into the afternoon and the index briefly fell to 5,485.98. On the main board, 709 stocks fell versus 174 gainers and 32 unchanged, with turnover in the range of 13.7 trillion won.
Closing levels over the last five sessions were 5,668.05 on the 16th, 5,768.01 on the 19th, 5,552.74 on the 20th, 5,735.66 on the 21st and 5,533.77 on the 22nd, a pattern of swings that ended in another steep drop. Compared with the 52-week high of 9,385.59, the index now sits roughly 41% lower. KOSDAQ fell 28.66 points (3.62%) to 764.10, and the won closed the daytime session at 1,324.2 per dollar, down 1.0 won from the prior day.
Sectors and Stocks: Chip and Battery-Related Names Weakest
On KOSPI, precision medical instruments (-4.7%), chemicals (-4.67%), electrical and electronics (-4.52%) and manufacturing (-4.15%) each fell more than 4%. Metals and machinery (-3.31%), pharmaceuticals (-2.85%) and securities (-2.67%) also dropped sharply. General services bucked the trend with a 1.85% gain, and construction rose in the 1% range on KOSDAQ.
Among large caps, Samsung Electronics closed 4.03% lower at 214,500 won and SK hynix 5.49% lower at 1,223,000 won. On KOSDAQ, EcoPro BM (-9.66%), Jusung Engineering (-8.93%), Wonik IPS (-7.92%), EcoPro (-7.54%) and Alteogen (-3.75%) were among the decliners.
Flows: Retail Buying, Institutions Selling, Foreigners Split by Data Source
Reports agreed on direction for individuals (net buyers) and institutions (net sellers). Foreign investors, however, looked different depending on the data used. Outlets citing Korea Exchange figures reported net retail buying of about 380 billion won, net institutional selling of about 460 billion won and net foreign buying of around 60 billion won. Money Today’s tally, which combines the Korea Exchange with Nextrade, showed net retail buying of 1.0363 trillion won, net institutional selling of 683.3 billion won and net foreign selling of 399.1 billion won. Program trading ended with net selling of roughly 300 billion won, concentrated in non-arbitrage trades.
Why It Fell: Three Worries Overlapped
1) Fears that AI investment has peaked. Lee Kyung-min of Daishin Securities said Meta’s and Tesla’s overnight results failed to deliver the same relief that SpaceX and Super Micro had provided earlier. Meta’s third-quarter revenue beat expectations, but attention turned to its massive capital spending. Tesla’s revenue topped Wall Street expectations while its profit dropped sharply.
2) A thinner supply-demand cushion. The same analysis noted that SK hynix’s share buyback ended the day before, weakening the cushion further, and that the index drop widened even though net selling by foreigners and institutions was not large.
3) Middle East anxiety and tightening worries. The US ordered non-essential diplomatic personnel in Saudi Arabia to leave, raising concern that military conflict could widen. Bank of Korea Governor Shin Hyun-song also said at the Monetary Policy Board meeting that uncertainty is high even as growth and inflation remain strong, citing the Middle East situation, major economies’ monetary policy, the US midterm elections and AI industry trends.
Wall Street Rose, So Why Not Seoul? A Phase of Testing AI Profitability
The New York market closed higher as AI-related stocks rebounded on SpaceX’s strong earnings. Even so, some read the weakness in Seoul as reflecting a stricter test of whether AI spending pays off. According to SBS’s evening briefing, Gartner expects AI companies to spend about 1 trillion dollars in 2026 and a further 6 trillion dollars on facilities from next year through 2030, and next year’s AI infrastructure spending by the five big tech names (Alphabet, Amazon, Microsoft, Oracle and Meta) is projected at 1.2 trillion dollars. Goldman Sachs said hedge funds net sold global AI and semiconductor stocks for five straight sessions from October 8 to 14, apparently unwinding in about a week all the net AI buying accumulated since 2025.
There are counter-signals. ASML said it cannot fully meet customer demand through the year after next, and TSMC stressed there are no signs of slowing demand. Earnings from Alphabet, Microsoft and Amazon cluster at the end of this month, which is expected to be a turning point for year-end market direction.
Parliamentary Audit: The National Pension Service and Domestic Equities
At the parliamentary audit, lawmakers raised the size of the decline in the National Pension Service’s domestic equity valuation compared with the KOSPI peak. The government said the fund should be judged on long-term returns across all assets rather than short-term valuation changes, and explained that the NPS must not become a tool for propping up share prices in the short term and that adjusting its domestic equity target weight is meant to reduce the market shock from abrupt rebalancing. The reports we reviewed did not detail the questioners’ arguments, so this section centers on the government’s explanation.
Investor Notes
- Over the last five sessions the index swung widely between roughly 5,500 and 5,700. Given such large daily moves, size positions and time trades carefully.
- Big tech earnings, the Middle East situation and the US midterm elections remain external variables later this month. Explanations for the decline are brokerage opinions and do not guarantee future direction.
- Flow statistics can differ depending on whether they use the Korea Exchange alone or include Nextrade. Check the data basis before reading foreign investor trends.
- Factors that could support a rebound, such as firm semiconductor demand comments and retail net buying, also exist. Rather than settling on pessimism or optimism, weigh both scenarios. This post is not investment advice.
In short, the October 22 session priced in the AI spending debate, Middle East tension and a thinner supply-demand cushion all at once, ending in a drop of more than 3%. The next turning point is big tech earnings at the end of the month. Whether those numbers ease or deepen doubts about AI profitability is likely to shape the market’s year-end direction.
References
- Money Today – KOSPI closes at 5533.77 as foreign and institutional selling erases rebound (mt.co.kr)
- Seoul Shinmun – [Market Close] KOSPI plunges 3.52% to 5,533.77 as chip and battery heavyweights fall across the board (seoul.co.kr)
- Asia Economy – KOSPI falls more than 3% on institutional selling, closes near 5530 (view.asiae.co.kr)
- SBS News – Musk’s painkiller: will a year-end relief rally come? [Evening Briefing] (news.sbs.co.kr)
- Newspim – New York stocks close higher as SpaceX earnings lift AI shares (newspim.com)