Foreigners sold about 2 trillion won — how a chip-heavy market suffered a 3.65% one-day plunge
🎧 Post Summary
📌 1-Minute Summary
South Korea’s benchmark KOSPI fell 3.65% on October 12 to close at 6,384.24. Foreign investors net sold roughly 2 trillion won, with SK hynix at about 1.04 trillion won and Samsung Electronics at about 533 billion won, so the selling was concentrated in the two chip giants. Individual investors net bought about 1.47 trillion won, absorbing the supply. The volatility index VKOSPI jumped more than 10% to 40.73. Brokerages point to continued foreign selling, a supply-demand gap after Samsung’s share buyback effect faded and the options expiry and ETF rebalancing passed, doubts over AI profitability that surfaced during the holiday break, and the burden of U.S. 10-year yields above 5%. At the same time, some argue that corporate earnings themselves remain intact.
On the first trading day after the Hangul Day holiday, KOSPI struggled all session and lost more than 3%. Just days earlier, the index had fallen even after Samsung Electronics reported operating profit above 100 trillion won, so many are saying the market that refused to rise on good news has finally cracked. The drop appears to be the result of several factors stacking up rather than a single cause. Below, we walk through the causes and the views of market experts.
① The Numbers on Oct 12: Foreigners Sold, Individuals Bought
Based on reports citing Korea Exchange data, KOSPI closed at 6,384.24, down 3.65%. By investor type, foreigners net sold about 2.02 trillion won, institutions net sold about 110.7 billion won, and individuals net bought about 1.47 trillion won. Foreign net selling extended to a fifth straight session and was concentrated in SK hynix (about 1.04 trillion won) and Samsung Electronics (about 533 billion won). Heavy selling in the index-heavy chip leaders reportedly deepened the decline.
② The Supply-Demand Gap: Buyback Effect Fades, Options Expiry and ETF Rebalancing
Brokerages first point to market structure. With buying by “other corporations” tied to Samsung Electronics’ share buyback having ended, the trend support that held up the index is said to have broken after the October 8 options expiry and ETF rebalancing. With fewer buyers stepping in, continued foreign selling intensified the downward pressure all at once. Trading value is also down about 70% from the May peak, and some note that in such a thin market the same amount of selling can move prices much more.
③ Overseas Shocks During the Holiday: AI Profitability Doubts and Chinese Memory Competition
While Korean markets were closed, a controversy over OpenAI’s revenue shortfall raised questions about the profitability of AI investment. News about China’s CXMT and its next-generation DRAM also fed worries about tougher competition in memory. For a chip-heavy KOSPI, both are direct burdens. One interpretation is that anxiety built up over the holiday was priced in all at once on the first trading day.
④ Macro Backdrop: U.S. 10-Year Above 5%, High Oil, Middle East Tension
Reports say the U.S. 10-year Treasury yield is around 5.3%, the highest since 2002. High oil prices and Middle East tensions involving Iran have also weakened risk appetite. Because higher yields lower the present value of future earnings of growth stocks, large chip and AI-related stocks are under particular pressure.
⑤ Leverage Unwinds and Volatility: VKOSPI Tops 40
VKOSPI rose 10.65% to 40.73. Some analysts say that as the decline accelerated, forced selling from leveraged ETFs and other levered positions added to the pressure. Bank of Korea Governor Shin Hyun-song earlier apologized in connection with warnings over leveraged ETF risk, so market sensitivity to leveraged products is already elevated. Authorities have said they could take market-stabilization steps if needed.
⑥ What Do Experts Say? Short-Term Correction vs. Broken Trend
Drawing on analyses by brokerage experts including Lee Jae-won of Yuanta Securities, Kim Doo-un of Hana Securities, Kang Jin-hyuk of Shinhan Investment and Lee Kyung-min of Daishin Securities, views split into two broad camps. The cautious camp expects volatility to stay elevated until foreign selling, rate pressure and thin trading volume ease. The oversold camp argues that the chip earnings outlook itself has not collapsed, so there is room for a rebound once supply-demand factors clear. Fourth-quarter index forecasts also vary widely among research center heads, showing that market participants lack conviction on direction.
📌 Things Worth Knowing
- Watch the flows: Check how many days foreign net selling continues and whether it stays concentrated in semiconductors.
- Be careful with leverage and margin: In volatile periods, losses on leveraged products can be far larger than the index decline.
- Fundamentals are a separate question: Some argue a sharp drop does not necessarily mean weaker earnings. Still, the effect of high rates and AI profitability doubts on prices may not fade quickly.
- Stagger entries and keep cash: With forecasts divided, spreading position size and timing may be worth considering instead of deciding all at once.
In short, the plunge is read as the result of foreign selling, a supply-demand gap after the buyback effect faded, negative overseas news during the holiday, and high interest rates all hitting at once. Some say it exposed the weak link of a market that could not rise even on good news. For now, foreign flows, U.S. yields and AI-related news are likely to steer the index. This post is not investment advice; investment decisions and responsibility rest with you.
References
- Newspim — Oct 12 KOSPI close and investor flows report (newspim.com)
- Seoul Economic Daily — KOSPI plunge and foreign selling coverage (sedaily.com)
- Financial News — analysis of the KOSPI plunge (fnnews.com)
- Mediadale (Newsis) — market plunge and authorities’ response (mediadale.com)
- Etoday — Q4 market outlook (etoday.co.kr)
- Segye Ilbo — Q4 KOSPI outlook (segye.com)