[Edaily Reporter Shin Ha-yeon ] The KOSPI closed sharply lower amid a plunge in U.S. semiconductor stocks and the fallout from geopolitical risks in the Middle East. As concerns grew over the sustainability of AI investments following the unveiling of “Kimi K3,” a high-performance AI model by Chinese AI startup MoonShot AI, selling pressure from institutional investors dragged the index down.

According to MP Doctor on the 20th, the KOSPI closed at 6,516.27, down 304.33 points (4.46%) from the previous trading day. The index opened at 6,643.58, down 2.60% from the previous session, and continued its downward trend, falling as low as 6,472.80 during the session.

At 11:21 a.m. that day, the 20th sell-side “side car” (suspension of sell orders in program trading) of the year was triggered. The KOSPI sell-side side car is triggered when the price of the nearest-month futures contract based on the KOSPI 200 index falls by 5% or more compared to the previous trading day and remains at that level for at least one minute.

In terms of supply and demand, retail and foreign investors recorded net purchases of 349.4 billion won and 523.6 billion won, respectively, on the stock market. In contrast, institutional investors recorded net sales of 920.2 billion won. Program trading, combining arbitrage and non-arbitrage trades, showed a net buying position of 718.2 billion won.

Overnight, U.S. stock markets fell across the board. The Dow Jones Industrial Average dropped 0.77%, the S&P 500 fell 1.01%, and the Nasdaq Composite declined 1.40%. Notably, the Philadelphia Semiconductor Index fell 20% from last month’s high, entering a bear market.

The unveiling of “Kimi K3,” a high-performance AI model by Chinese AI startup MoonShot AI, dampened investor sentiment. As Kimi K3—released using an open-weighting method—ranked among the top performers in global AI performance evaluations, expectations for lower AI development costs grew, leading to profit-taking in AI and semiconductor stocks, including NVIDIA.

Geopolitical risks in the Middle East also weighed on the market. Tensions between the U.S. and Iran escalated again following an Iranian attack that resulted in U.S. military casualties, and international oil prices—with both Brent and West Texas Intermediate (WTI) futures rising by more than 4%—dampened investor sentiment toward risk assets.

However, experts assess that while short-term volatility may persist, the AI investment cycle itself remains intact.

Shin Seung-jin, an analyst at SamsungSecurities, said, “While the direction of AI has not changed, individual stock prices have fallen more than 30% from their peaks,” adding, “With Big Tech earnings on the horizon and Middle East issues resurfacing, the current increase in short-term volatility is likely to mark the peak of this week’s price movements.” He continued, “Now is the time to maintain a portfolio of AI-led stocks or consider additional purchases—not to sell.”

Na Jeong-hwan, an analyst at NH INVESTMENT & SECURITIES, analyzed, “The end of a bull market has always coincided with a slowdown in earnings momentum and the Federal Reserve’s tightening of monetary policy.” He noted, “Currently, earnings forecasts are still being revised upward, and monetary policy is hardly tightening, so the trigger to end the bull market has not yet been pulled.”

By sector, all sectors posted losses except for the real estate index (0.84%), which closed slightly higher. Insurance fell by around 8%, and machinery and equipment closed down by around 7%. This was followed by retail (-6.27%), medical and precision instruments (-5.86%), securities (-5.79%), transportation equipment and parts (-5.75%), metals (-5.06%), finance (-4.59%), manufacturing (-4.51%), electrical and electronics (-4.43%), construction (-4.29%), IT services (-4.20%), paper and wood (-3.84%), textiles and apparel (-3.78%), chemicals (-3.47%), pharmaceuticals (-3.11%), general services (-3.01%), and electricity and gas (-2.85%) all posted significant declines.

Among the top market-cap stocks, SamsungElectronics(005930)closed at 244,000 won, down 11,000 won (4.31%) from the previous trading day, while SK hynix(000660)closed at 1,764,000 won, down 78,000 won (4.23%). In addition, SKSQUARE(402340)(-2.89%), SamsungElectroMechanics(009150)(-0.16%), HyundaiMotor(005380)(-6.12%), LG Energy Solution(373220)(-4.94%), SAMSUNG BIOLOGICS(207940)(-3.65%), Samsung Life Insurance(032830)(-8.91%), and KB Financial Group(105560)(-6.79%) all fell across the board.

KOSPI trading volume totaled 339.5 million shares, with a total trading value of 28.414 trillion won. Including three stocks that hit their upper price limit, 97 stocks rose, while 799 stocks fell, including four that hit their lower price limit. Eighteen stocks traded flat.

At the same time, the KOSDAQ index closed at 749.64, down 42.20 points (5.33%) from the previous trading day. This marks the first time in about 13 months—since June of last year (closing price of 740.29 on the 2nd)—that the KOSDAQ index has fallen below the 750-point mark based on the closing price.

At 10:52 a.m., the 10th KOSDAQ sell-side circuit breaker of the year was triggered. By investor type, foreign and institutional investors recorded net sales of 61.9 billion won and 134.8 billion won, respectively, while retail investors were the sole net buyers, purchasing 190.7 billion won worth of stocks.