[Opening Market] KOSPI Slides Nearly 1% Despite Wall Street Rally

South Korean stocks opened lower on Thursday, October 22, despite a significant rebound on Wall Street, which was largely fueled by gains in technology shares related to artificial intelligence (AI). The decline in the domestic market was primarily driven by profit-taking in major semiconductor companies.

As of 9:28 a.m. KST, the Korea Exchange reported that the KOSPI index was at 5,684.58, down 51.08 points or 0.89% from the previous day. Initially, the benchmark index dropped 65.55 points, or 1.14%, opening at 5,670.11 before recovering slightly to hover around the 5,700 mark. Foreign investors continued their buying trend, purchasing a net 160.2 billion won (approximately $120.75 million), marking their second consecutive day of net buying. In contrast, retail and institutional investors sold a net 54.1 billion won and 110.1 billion won, respectively.

The decline in South Korean equities stood in stark contrast to the performance of U.S. markets the previous day. On October 21, the Nasdaq Composite rose by 1.05%, while the Dow Jones Industrial Average and the S&P 500 increased by 0.69% and 0.58%, respectively. Notably, SpaceX shares surged by 7.8% after the company announced its first quarterly profit since going public, and Tesla's stock climbed by 3.4% amid speculation regarding a potential merger between the two companies led by Elon Musk. Major semiconductor stocks in the U.S. also performed well, with Nvidia increasing by 2.5% and Micron Technology rising by 2.0%, contributing to a 1.97% gain in the Philadelphia Semiconductor Index.

Despite the positive trends in U.S. markets, South Korea's top semiconductor firms, Samsung Electronics and SK hynix, experienced declines, placing downward pressure on the KOSPI. Samsung Electronics saw a decrease of 0.78%, trading at 221,750 won, while SK hynix fell by 1.08% to 1,280,000 won. Analysts attributed these losses to short-term profit-taking following significant gains of over 5% in the previous session.

Han Ji-young, an analyst at Kiwoom Securities, remarked that the high expectations for AI-related stocks have made share prices particularly sensitive to market fluctuations. She predicted continued volatility as investors cash in on profits after recent sharp increases.

Many other major stocks also experienced losses. LG Energy Solution dropped 3.40%, Samsung Biologics declined by 1.62%, and Hyundai Motor fell by 1.78%. However, Samsung Electro-Mechanics and Samsung Life Insurance bucked the downward trend, gaining 3.77% and 0.20%, respectively. Samsung E&A saw a notable increase of over 18% in early trading after reporting better-than-expected third-quarter earnings and unveiling a significant share buyback and cancellation plan.

The KOSDAQ index also faced selling pressure, dropping by 14.10 points or 1.78% to reach 778.66. Foreign and institutional investors were net sellers, offloading 57.9 billion won and 27.3 billion won, respectively. Secondary battery stocks were among the largest decliners, with EcoPro BM falling by 6.16% and EcoPro declining by 3.47%. Other large-cap stocks such as Alteogen and HLB also weakened, with declines of 2.71% and 2.01%, respectively. In contrast, semiconductor substrate manufacturer Simmtech and robotics firm Rainbow Robotics saw modest gains of 2.54% and 0.13%, respectively.

Despite the overall market downturn, healthcare stocks demonstrated relative strength. The KRX 300 Healthcare Index increased by 5.65% over the past week, significantly outperforming the broader market. This resilience has been attributed to growing caution towards technology stocks amid concerns about excessive AI investments, as well as optimism surrounding new drug developments. Selected healthcare stocks, including Yuhan Corporation, have benefitted from institutional buying, although performance is expected to remain uneven as the earnings season progresses.

In currency markets, the won-dollar exchange rate opened at 1,327.8 won per dollar in Seoul, reflecting a slight depreciation of the won by 1.8 won from the previous session. International crude oil prices showed mixed results, with West Texas Intermediate (WTI) dropping by 0.68% amid renewed speculation regarding potential peace talks between Russia and Ukraine. In the cryptocurrency sector, Bitcoin managed to recover to the $84,000 level, buoyed by the rebound in U.S. tech stocks and a renewed appetite for risk assets.