Korean stocks rebound at the open on U.S. tech strength, but sentiment dampens anew on Intel and DeepSeek headlines
Foreign sell-off compounded by rate and oil pressures; SK hynix touches intra-day low not seen since April
Key Market Dynamics
① Semiconductors rattled by minor AI headlines, from Intel to DeepSeek
The market started on a firm footing, bolstered by overnight strength in U.S. semiconductor shares and bargain hunting following recent sharp corrections.
Investment sentiment was initially supported by major brokerages, including Goldman Sachs, assessing that CoreWeave’s recent pullback had been overdone.
However, the market remains highly hypersensitive to any news flow regarding artificial intelligence and semiconductors.
Gartner reignited skepticism over whether the anticipated $3.5 trillion in AI investments will actually materialize, pointing out that capital expenditures by AI firms are outpacing revenue growth.
Adding downward pressure to chip stocks, reports emerged that Intel’s D-series data center GPUs will adopt LPDDR5X memory instead of High Bandwidth Memory (HBM).
Furthermore, reports that DeepSeek is developing AI chips in conjunction with Huawei resurrected concerns over Chinese competition.
While these developments do not immediately alter global semiconductor demand, they served to re-stimulate investor anxiety, which remains easily bruised by minor headwinds.
② Foreign sell-off driven by rising rates and oil; Large caps retreat again
Global interest rate pressures persisted as political instability in France rattled sovereign bond markets.
International crude prices held onto gains amid ongoing attacks involving Saudi Arabia and Houthi forces.
Higher yields and oil prices acted as a drag, directly impacting foreign capital flows into the domestic stock market.
Foreign investors net-sold electrical/electronic equipment, transport equipment, chemicals, and machinery.
Institutional investors similarly net-sold across most sectors, excluding pharmaceuticals, food & beverage, and insurance, while both foreign and institutional investors maintained a selling bias on the KOSDAQ.
SK hynix breached recent support levels to touch an intra-day low not seen since April, while Samsung Electronics also suffered steep losses.
Beyond semiconductors, construction, shipbuilding, chemicals, and secondary batteries underperformed, with only gaming and select consumer stocks managing a rebound.
③ Margin liquidation deepens index losses
As the main index retreated during the session, margin-related liquidation triggered a wider sell-off, deepening the market's losses.
Although strong bargain hunting emerged at session lows on the previous day, gains remained capped by the close, reflecting an underlying fragility in market confidence.
Echoing Wedbush analyst Dan Ives’ remark on recent AI-related adjustments—that "it’s the same script with a different cast"—the market continues to cycle through familiar patterns under the guise of shifting negative catalysts.
While most analysts maintain their long-term growth forecasts for the AI industry, the market reacts disproportionately to minor bad news.
Apprehension is mounting among investors as they worry that a contraction in AI investments could ultimately alter the broader global economic outlook.
Supply, Demand, and Sectors
Foreigners net-sold primarily in electrical/electronics, transport equipment, chemicals, and machinery.
Institutions were net sellers across most sectors, with the exception of pharmaceuticals, food & beverage, and insurance.
On the KOSDAQ, both foreign and institutional investors engaged in concurrent net selling.
Samsung Electronics and SK hynix suffered sharp renewed declines, while construction, shipbuilding, chemicals, and secondary batteries trended lower.
Conversely, relative buying interest flowed into gaming and select consumer shares.
Market Analyst Perspective
The current market is being driven primarily by sentiment and supply-demand dynamics rather than corporate fundamentals. While earnings forecasts for semiconductor firms have yet to experience notable downward revisions, heavy selling quickly emerges—particularly among large-cap stocks—whenever news concerning AI and China surfaces.
Today, reports regarding Intel’s omission of HBM and DeepSeek’s development of Huawei chips were not catalysts capable of immediately altering actual demand, yet the market reacted violently. This demonstrates that investor sensitivity to negative news remains unabated, even following recent steep corrections.
Supply-demand pressures also persist. As the index slid, margin liquidations resurfaced to exacerbate the downward momentum, with foreigners and institutions maintaining net-selling stances in key sectors. Time will be required for stable buying support to take root amid this cycle of sharp slumps and rebounds.
On a brighter note, the won-dollar exchange rate fell relatively sharply despite the plunging stock index. Given the continued influx of foreign currency capital, this cannot be construed as a wholesale capital flight from the domestic market. Semiconductor earnings also remain robust. Investors should remain mindful of excessive pullbacks driven by sentiment and liquidity jitters while closely monitoring the performance of recently resilient sectors and earnings-driven stocks.
Source: Market Analyst's Stock Story (t.me/shmstory)
YouTube: Market Analyst TV www.youtube.com/@blueoak1004
This article has been reorganized from a Telegram post by "Market Analyst's Stock Story" with the author's consent. All content may contain errors and does not constitute a recommendation to buy or sell, nor can it be used as a basis for trading. Under no circumstances may the contents of this post be used as legal grounds.
