KOSPI rebounds above 5,500, but whether it has bottomed remains unclear
The KOSPI, which plunged more than 3% in early trading and dipped below the 5,500 mark, closed higher on the back of bargain hunting. According to the Korea Exchange on the 19th, the KOSPI finished at 5,768.01, up 99.96 points (1.76%) from the previous session. It opened at 5,488.41, down 179.64 points (3.17%), falling below 5,500 in early trading, but pared its losses and turned positive. The KOSDAQ also closed at 808.89, up 14.11 points (1.78%). The rebound is attributed to stocks' increased price appeal following last week's sharp decline. However, analysts caution that a one-day rebound does not mean the market downturn is over.
Institutional investors provided the bulwark in terms of supply and demand. In the KOSPI market, institutions bought a net 577.3 billion won while individuals and foreigners sold a net 1.0883 trillion won and 38.1 billion won, respectively. Foreign investors had been net sellers on the scale of trillions of won for eight consecutive sessions starting on the 8th, and after briefly turning net buyers on the 16th, they flipped back to selling on the day. In the KOSDAQ market, institutions and individuals net bought 64 billion won and 67 billion won respectively, while foreigners net sold 145.3 billion won.
What weighed on the market that day was growing doubts about the profitability of AI infrastructure investment. As credit concerns surrounding CoreWeave, an AI infrastructure company, came into focus, questions grew about whether debt-fueled capital spending could continue. CoreWeave's shares plunged 11.91%, and the selling spread across AI and semiconductor-related stocks broadly. The Nasdaq's 2.15% drop in New York on the 16th and the Philadelphia Semiconductor Index's eighth straight decline — its longest losing streak since the 2008 financial crisis — also underscored the weakness in tech stocks.
Large-cap stocks mostly closed higher. Samsung Electronics (218,000 won) and SK hynix (1,277,000 won) rose 1.16% and 0.39% respectively, while LG Energy Solution and Hyundai Motor jumped 7.20% and 4.49%. Samsung Biologics surged 9.94%. On the KOSDAQ, secondary battery stocks led by EcoPro (up 11.19%) and EcoPro Materials (up 8.33%) stood out.
Brokerages are split between views that a short-term bottom is near and warnings of further declines. Yuanta Securities analyzed that the KOSPI's 12-month forward price-to-earnings ratio stood at 4.6x as of the 16th, approaching levels seen when past short-term corrections subsided. Kim Jae-seung, a researcher at Hyundai Motor Securities, explained, "Rather than demand for AI services itself, market attention is focused on whether data center companies can shoulder their borrowing costs amid high interest rates and keep up their capital investment." Lee Jae-man, a researcher at Hana Securities, cited 5,300 as an estimate of the KOSPI's second trough based on past precedents, and 5,150 — corresponding to a 12-month forward price-to-book ratio of 1x — as another key level.
