Two sessions of heavy selling
The benchmark index of the South Korean stock market, the Kospi, closed Friday down 324.11 points, or 6.02%, at 5,059.69, after falling as low as 4,911.28. It was the second consecutive decline after Thursday's -5%. According to The Korea Herald, the index had lost more than 8% at the open, triggering a 20-minute suspension in trading in Kospi stocks by the exchange operator.
Volumes were described as moderate: 297 million shares traded for a total value of 27.5 trillion won ($20.3 billion). Declining stocks clearly outnumbered advancing ones, 757 to 131.
The link to the US elections
According to the source, the selling was driven by fears that the US Congress, after the midterm elections, could slow the construction of data centers for artificial intelligence. Lee Kyoung-min, an analyst at Daishin Securities, said the crash was driven by concerns about a possible regulatory tightening on AI data centers, fears that spread across the entire AI supply chain, including semiconductors.
The analyst explained that Democrats won both chambers of Congress in the elections earlier this week, with five states flipping to the Democratic Party, including Texas, which is among the main locations for AI data centers. He added, however, that the probability of a complete halt to construction by US lawmakers is low and that the market reaction is "excessive." This is the analyst's assessment, not an established fact.
Stocks and currency
Among the market heavyweights, Samsung Electronics fell 6.35% to 188,700 won and SK hynix 10.44% to 1,132,000 won. Hyundai Motor fell 4.77% to 279,500 won, Hanwha Aerospace 2.94% to 660,000 won and KB Financial 3.82% to 151,000 won. Some IT stocks bucked the trend: Naver gained 2.87% to 190,200 won and Samsung SDS 6.34% to 218,000 won.
On the currency market, the won was quoted at 1,356.6 per dollar at 15:30, depreciating by 14.5 won from the previous session. Foreign investors were net sellers of a total 2.77 trillion won, while retail and institutional investors were net buyers of 2.3 trillion won.
To be verified
It remains to be confirmed which regulatory measures, if any, will actually be discussed by the new Congress and on what timeline; the available material does not specify this. The impact on data center construction schedules is also not quantified, nor are any actions by South Korean market authorities indicated beyond the temporary trading suspension.
