South Korea's Kospi gave up a 2.2% opening gain on Wednesday and turned lower as foreign investors resumed selling, a day after they sold about 1.52 trillion won ($1.13 billion) of Korean shares and sent the benchmark down 3.59% to 5,648.79. The index was down 1.5% at 5,564.34 as of about 10:45 a.m. Seoul time, AJU Press reported, after trading as high as 5,828.13.

The swings matter well beyond Seoul. Samsung Electronics and SK hynix together make up nearly half of the Kospi's market value, the Korea JoongAng Daily reported last month, so the index now trades largely as a proxy for the memory chips that go into AI data centers. When investors in New York question how that build-out will be paid for, Seoul is among the first markets to feel it.

Kospi and Kosdaq Fall on AI Funding Fears

Tuesday's drop erased Monday's 2.24% rebound. The Kospi opened 2.46% lower and slid through the session, closing down 210.29 points, according to AJU Press. The tech-heavy Kosdaq fell 4.08%, or 29.97 points, to 704.39, holding just above the 700 mark after touching 702.34 during the day.

The trigger was a run of debt raising by U.S. technology companies. AJU Press cited Oracle's plan to raise $20 billion through an even split of stock and bonds, a reported Meta bond sale of at least $20 billion and a multibillion-euro bond offering by Alphabet. Lee Kyung-min of Daishin Securities told the outlet that the repeated bond announcements revived doubts about how AI spending will be financed, which weighed on the whole AI supply chain. Overnight, the Nasdaq Composite had fallen 1.07% and the S&P 500 0.51%, Yonhap reported.

Chipmakers took the heaviest losses. SK hynix fell 5.2% to 1,396,000 won and Samsung Electronics dropped 4.2% to 219,500 won, according to AJU Press. SK Square, SK hynix's parent, lost 5.6%, Samsung Electro-Mechanics slid 7% and printed-circuit-board maker Daeduck Electronics sank 13.4%. Battery maker Samsung SDI fell 8.6%.

The few gainers were outside tech. Hanjin KAL jumped 30% to its daily upper limit on speculation about a stake contest between Chairman Cho Won-tae and Hoban Group, AJU Press said, after Cho disclosed plans to buy 325,000 shares that would lift his stake to 6.23% from 5.75%. Samsung Biologics added 1.2% and HD Korea Shipbuilding rose 2.4%.

Retail Investors Buy as Foreign Funds Sell

The split between local and overseas money widened again. Retail investors bought a net 1.66 trillion won of Kospi shares on Tuesday, while institutions sold 511.3 billion won alongside the foreign outflow, according to preliminary figures reported by AJU Press. On the Kosdaq, foreigners sold 74.7 billion won and institutions 234.5 billion won, while individuals bought 319.7 billion won.

The pattern has held for weeks. The Kospi lost about 19% of its market value, roughly 1.05 quadrillion won, between the start of October and Oct. 20, the steepest fall among major Asian indexes, the Korea JoongAng Daily reported on Oct. 20. The paper cited a credit scare at data-center operator CoreWeave and the collapse of a planned $5 billion IPO by Australia's Firmus as early signs of strain in AI financing. It also noted that chip stocks accounted for 10.4 trillion won of the 33.4 trillion won in outstanding margin loans at the end of September, a concentration that can turn retail buying into forced selling when prices fall sharply.

Capital Times reported earlier how Alphabet's cash burn dragged Samsung and the Kospi down 3%. The debate over whether the National Pension Service should lean against the selling is covered in our editorial on the fund's 20.8% domestic stock target.

Opening Rally Fades on Wednesday

Wednesday's open followed a turn in U.S. chip stocks. The Philadelphia Semiconductor Index climbed 2.63% overnight, the Nasdaq gained 0.83% and the S&P 500 rose 0.36%, according to Yonhap. The Kospi rose 124.21 points to 5,773 by 9:15 a.m., with SK hynix up 3.86%, Samsung Electronics up 1.94% and Hanmi Semiconductor up 4.89%.

The gains did not last. AJU Press said uncertainty over the U.S. midterm elections, where vote counting was still under way, weighed on sentiment, and Nasdaq 100 futures fell nearly 1.5% during early Asian trading. By about 10:45 a.m., foreign investors had sold a net 695 billion won of Kospi shares, while retail investors bought 372.2 billion won and institutions 196.9 billion won. SK hynix was down 3.65% at 1,347,000 won and Samsung Electronics down 1.82% at 215,500 won. The Kosdaq fell 2.1% to 689.85, below the 700 mark it held on Tuesday.

The won traded at 1,345.5 per dollar at 9:15 a.m., Yonhap reported, down 1 won from Tuesday's close.

The Seoul market closes at 3:30 p.m. By mid-morning, the index was more than 290 points below Monday's close of 5,859.08, and foreign funds had been net sellers again for a second straight session.