AI Euphoria Gives Way to Anxiety as Kospi Slips Below Key Threshold (Yonhap)
SEOUL, Nov. 10 (Korea Bizwire) — South Korea’s benchmark stock index fell below the 4,000 mark this week amid renewed concerns over an artificial intelligence (AI) bubble, leading to a surge in forced stock liquidations from margin accounts, industry data showed Sunday.
According to the Korea Financial Investment Association, the value of forced sell-offs from unsettled margin transactions reached 21.9 billion won (US$15.8 million) as of Wednesday, the highest level this year. The figure exceeded the previous peak of 19.7 billion won recorded on Sept. 29.
Forced liquidations — known locally as “ban-dae mae-mae” — occur when investors fail to settle short-term credit purchases within two business days, prompting brokerages to automatically sell the securities to recover the debt.
The increase in such transactions reflects the sharp downturn in the Kospi, which has lost momentum after a months-long rally fueled by optimism over semiconductor demand and expectations of a U.S. interest rate cut.
After briefly surpassing 4,200 points earlier this month, the Kospi tumbled below 4,000, dragged down by declining chip stocks and weakening investor sentiment. On Thursday, it briefly dipped below 3,900 before recovering slightly to close at 3,953.76, supported by retail buying.
The earlier rally had been driven by semiconductor giants Samsung Electronics and SK hynix on hopes of a “supercycle” in memory chips and ample market liquidity. However, investor confidence faltered as speculation over an AI-driven bubble resurfaced and expectations for additional rate cuts by the U.S. Federal Reserve faded.
Adding to the pressure were growing concerns over a prolonged U.S. government shutdown and weaker employment data. Challenger, Gray & Christmas reported that 153,074 U.S. jobs were cut in October — the largest reduction for the month since 2003.
Lee Sung-hoon, an analyst at Kiwoom Securities, said the market remains highly sensitive to negative news. “The AI momentum that drove the September–October rally has entered a cooling phase,” he said. “While chipmakers are taking a breather, policy momentum from the new government could regain attention in November, particularly discussions over dividend taxation and corporate share buybacks.”
Ashley Song (ashley@koreabizwire.com)
