KOSPI Slides 3.26% as Oil Spikes and AI Sentiment Cools
South Korean equities suffered a sharp decline on Friday as rising crude oil prices and surging U.S. bond yields weighed on valuations, triggering significant outflows from semiconductor giants like Samsung Electronics and SK hynix.
The KOSPI index closed at 6,684.37, marking a 3.26% drop of 225.54 points from the previous session. This decline reversed earlier intraday gains driven by retail buying, as foreign and institutional investors became heavy net sellers. The session was defined by a broad sell-off in large-cap technology stocks, specifically within the semiconductor sector, which served as the primary drag on the overall market performance.
Investor sentiment deteriorated rapidly due to a combination of macroeconomic headwinds. International crude oil prices breached the $100 per barrel threshold following supply disruptions caused by the shutdown of a key pipeline in Saudi Arabia. Simultaneously, the yield on U.S. 10-year Treasury bonds spiked to 4.975%, increasing the cost of capital and pressuring growth-oriented valuations. These factors combined to create a risk-off environment that overwhelmed domestic retail inflows.
Semiconductor giants lead broad market decline
Samsung Electronics fell 4.05% to close lower, while SK hynix dropped 6.35%, reflecting intense selling pressure on the sector's leaders. Other major technology and industrial blue chips followed suit, with Samsung Electro-Mechanics down 4.50% and SK Square plunging 8.17%. The weakness extended to non-tech sectors as well, with Hyundai Motor, LG Energy Solution, and Samsung Life Insurance all posting losses, indicating a lack of safe havens within the main board index.
The KOSDAQ index mirrored this weakness, closing at 806.79, a 1.69% decrease. Foreign investors sold a net 134.7 billion won in the KOSDAQ market, while institutions offloaded 24.4 billion won. Individual investors attempted to cushion the blow, buying a net 148.4 billion won, but this was insufficient to offset the institutional exit, resulting in a persistent downward trend for smaller-cap growth stocks.
Foreign and institutional flows drive selling
The selling pressure was concentrated among large institutional players on the main board. Foreigners were net sellers of 3.92 trillion won, while institutions sold a net 1.60 trillion won. Within the institutional category, brokerages were the largest sellers, offloading 1.05 trillion won, followed by private equity funds which sold 329.9 billion won. This institutional exit was partially offset by retail investors, who bought a net 4.07 trillion won, and other corporations, which added 1.45 trillion won to their holdings.
Selective gains in niche thematic sectors
Despite the broad market downturn, specific thematic areas attracted capital flows based on distinct business drivers. In optical communications, Vissem Electronics surged 26% as investors focused on infrastructure upgrades. The deepfake and security AI sector also performed strongly, with SANDS Lab rising 25.23% and Raonsecure up 20.47%, driven by expectations for new security model developments and shareholder return initiatives. Additionally, K-beauty companies like Aromatica and Amorepacific posted gains, supported by solid global export results and expanded overseas distribution channels.
The divergence between the heavyweights and these niche sectors highlights a shift in market focus. While the core semiconductor and industrial complex faced valuation compression due to macroeconomic costs, investors rotated into companies with specific operational catalysts or defensive characteristics. This rotation underscores the current market's sensitivity to interest rate environments and supply chain risks, as reported in GN auto stocks/technology: chip stocks coverage.
