[Opening Market] Korean Stocks Plunge as U.S. Inflation, AI Fears Trigger 'Black Thursday'

South Korea's stock markets experienced a dramatic "Black Thursday" drop on October 15 due to a confluence of issues, including a surprise surge in U.S. inflation and fears about the viability of the artificial intelligence (AI) sector. The Kospi and Kosdaq indices both plummeted by 5–6% during early trading, with sell-side sidecars, or temporary pauses of program sell orders initiated by sharp market declines, being triggered in both markets.

This marked the first instance of such measures being activated in both markets on the same day in nearly 11 weeks.

The Kospi index dropped to a low of 5,615.72 during trading, testing the 5,600-point mark. Semiconductor stocks suffered heavily, with Samsung Electronics down more than 7% and SK hynix dropping almost 9%. Other tech giants such as SK Square and Samsung Electro-Mechanics also saw significant declines. The sell-off was largely triggered by heavy selling in semiconductor and technology stocks on Wall Street, where the Philadelphia Semiconductor Index fell 4.30% for its sixth consecutive day of losses.

Nvidia, Micron, and AMD all faced declines of 3.16%, 4.08%, and 5.73%, respectively. Investors expressed particular concern over SK hynix's American depositary receipts, which fell below their initial offering price. Inflation data released after the market open topped market forecasts, with the U.S. September Consumer Price Index (CPI) rising 3.7%, surpassing the 3.6% forecast.

Core CPI also exceeded expectations, indicating ongoing inflationary pressures. Rising international crude oil prices above $100 per barrel further fueled inflation concerns.

Market experts pointed to renewed worries about potential interest rate hikes as a key catalyst for the decline following the U.S. CPI report. Additionally, skepticism over AI infrastructure investment weighed on the market, with research firms like Gartner issuing negative outlooks on massive capital expenditures generating less revenue than anticipated.

Shares of AI-related firms that expanded data center capacity through debt financing plunged, with CoreWeave dropping 15.46% and Oracle falling 8.83%. This selling pressure extended to related South Korean stocks.

Foreign investors were notably active, recording net sales for eight straight trading days on the Kospi market, selling over 900 billion won worth of shares during the morning session alone. Despite some institutional and individual investors stepping in to buy shares at lower prices, their purchases were not enough to counteract the downward pressure.

The won-dollar exchange rate climbed to around 1,340 won per dollar, up from the previous trading day, as dollar strength following the U.S. inflation shock and increased risk aversion pushed the rate higher. However, gains were limited by selling from exporters. Investors are now watching TSMC's earnings announcement later in the session, hoping it might help offset some of the semiconductor sector's losses.