The KOSPI plunged more than 3% on the 14th as concerns over U.S. interest rate increases and rising global oil prices were compounded by calls to slow the pace of artificial intelligence development. The index recovered much of its intraday losses at one point, but fell back below 6,700 as selling resumed late in the session.
The KOSPI closed at 6,684.37, down 225.54 points, or 3.26%, from the previous session, according to the Korea Exchange on the 14th. The KOSDAQ ended at 806.79, down 13.85 points, or 1.69%. It was the KOSPI's third consecutive session of declines.
The KOSPI opened at 6,692.61, down 217.30 points, or 3.14%, and fell as low as 6,654.82 in the morning, widening its loss to 3.69%. Bargain hunting later lifted the index back above 6,900 in the afternoon, but losses widened again toward the close.
Sharp declines in large-cap semiconductor stocks dragged the index lower. Samsung Electronics (005930.KS) closed at 249,000 won, down 10,500 won or 4.05% from the previous session. SK hynix (000660.KS) finished at 1.697 million won, down 115,000 won or 6.35%. Samsung Electro-Mechanics fell 4.50%, LG Energy Solution (373220.KS) 2.36% and Hyundai Motor (005380.KS) 2.88%.
Successive remarks by global big tech leaders arguing that AI development should be slowed also dealt a direct blow to chip stocks. Anthropic Chief Executive Dario Amodei said the pace of improvement in AI models should be slowed and additional safeguards put in place, and Tesla CEO Elon Musk, OpenAI CEO Sam Altman and Google DeepMind CEO Demis Hassabis also agreed on the need to moderate the pace.
U.S. inflation data that came in above expectations was also seen weighing on the market. The U.S. core consumer price index rose 0.3% in August from the previous month, exceeding market forecasts of 0.2%. The probability of a rate increase at the September Federal Open Market Committee meeting, as reflected in the CME FedWatch tool, climbed to 86% to 87%. The yield on the 10-year U.S. Treasury note also touched 5% during the session.
Uncertainty over the situation in the Middle East also grew again. A meeting among Middle Eastern countries on passage through the Strait of Hormuz, which the market had been anticipating, was postponed, and reports emerged of a suspension of operations at Saudi Arabia's east-west oil pipeline, pushing Brent crude back above $108 a barrel. Analysts said concerns that high oil prices could stoke inflation and prolong tightening by major economies weighed on investor sentiment.
Bank stocks, expected to benefit from higher interest rates, rose. On expectations that prolonged rate increases in South Korea and the U.S. would improve net interest margins, Woori Financial Group (316140.KS) climbed 4.99%, Hana Financial Group (086790.KS) 2.18% and KB Financial Group (105560.KS) 2.08%.
Foreign investors sold a net 3.9116 trillion won worth of shares on the main board that day, while institutions sold a net 1.69 trillion won. Foreign investors were net sellers for a fourth consecutive session and institutions for a fifth, unloading a combined total of more than 5.6 trillion won in a single day. Individual investors bought a net 4.125 trillion won. On the KOSDAQ, foreign investors and institutions sold a net 120.9 billion won and 34.8 billion won, respectively, while individuals bought 148.4 billion won.
"Macro sensitivity in the stock market is expected to rise this week as investors digest the September FOMC and the Bank of Japan meeting," said Lim Jung-eun, an analyst at KB Securities. "With volatility continuing, we need to watch foreign investor flows and whether semiconductor stocks regain their leadership."
