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(Seoul=Yonhap Infomax) Kyu Sun Lee – South Korea's benchmark KOSPI index is expected to come under significant downward pressure at the open on the 21st, following a sharp overnight sell-off in US tech stocks despite strong earnings from Nvidia Corp.
The Philadelphia Semiconductor Index tumbled more than 4%, fueling concerns over foreign capital outflows from major South Korean semiconductor stocks such as Samsung Electronics Co., the country's largest company by market value, and SK hynix Inc.
The KOSPI 200 futures index, traded overnight, closed down 3.67%.
On Wall Street, the tech-heavy Nasdaq Composite Index fell 2.15%, while the S&P 500 Index dropped 1.56% and the Dow Jones Industrial Average lost 0.84%.
Nvidia, which had been in the spotlight, reported earnings that beat market expectations, yet its share price declined 3.15%. The drop was attributed to concerns that a surge in accounts receivable could delay AI profitability for major big tech clients. As a result, key semiconductor stocks such as Micron Technology Inc. (-10.9%) and Advanced Micro Devices Inc. (-7.8%) also slumped, sending the Philadelphia Semiconductor Index down 4.77%.
Hawkish comments from US Federal Reserve officials and robust employment data further dampened hopes for rate cuts, undermining investor sentiment. Notably, nonfarm payrolls in September rose by 119,000, far exceeding the consensus estimate of 53,000.
Market strategists expect the US tech stock shock to weigh on the domestic market in the short term, but emphasize that the decline is not due to deteriorating fundamentals, urging investors to respond calmly.
Ji-young Han, analyst at Kiwoom Securities, said, "Nvidia's earnings were positive, but renewed concerns over AI profitability and hawkish Fed commentary rapidly cooled market sentiment."
Han added, "Today, the KOSPI will inevitably see volatility centered on semiconductor stocks. However, fears of an AI bubble are somewhat exaggerated. Rather than panic selling and sharply increasing cash holdings, it is advisable to maintain existing positions."
Some analysts suggest using the correction as a buying opportunity.
Hae-chang Jeong and Kyung-min Lee, analysts at Daishin Securities, noted, "The recent market correction appears to be a process of unwinding excesses amid liquidity adjustments. As the mid- to long-term global liquidity cycle remains intact through 2026, it is worth considering increasing exposure to sectors with improving earnings, such as semiconductors and defense, which have become more attractive in terms of valuation during this correction."
kslee2@yna.co.kr
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