KOSPI Falls Below 4,000 on the 18th and 3,900 on the 19th
Investor Sentiment Weakens Amid Rate Uncertainty and AI Bubble Concerns
Negative News Triggers Sharper Reactions as Sentiment Fades
Heightened Volatility Expected After Nvidia Earnings
The KOSPI index has fallen below the 4,000-point mark again after seven days. Investor sentiment is weakening due to diminished expectations for interest rate cuts and concerns about an artificial intelligence (AI) bubble, both of which are increasing market volatility.
As of 9:25 a.m. on November 19, the KOSPI was trading at 3,888.74, down 64.88 points (1.64%) from the previous day. The index has continued its sharp decline for a second consecutive day, falling below the 3,900-point level. The KOSDAQ was also down 17.81 points (2.03%) at 860.89.
The previous day, the KOSPI closed down 3.32%, dropping below the 4,000-point level for the first time in seven days. After falling 3.81% on November 14 and rebounding 1.94% on November 17, the market has continued to swing wildly, with another drop of more than 3%.
Han Ji-young, a researcher at Kiwoom Securities, commented, "Currently, leading AI stocks such as Nvidia and Microsoft are under increasing correction pressure. The instability of these leading stocks is negatively affecting investor sentiment, with intraday selling triggering further waves of selling, creating a negative ripple effect." She added, "In such a vulnerable investment climate, there is a tendency to interpret most factors negatively."
Since hitting a historic all-time high on November 3, the KOSPI has been weighed down by concerns over the rapid pace of stock price increases, recurring worries about an AI bubble, and uncertainty over a possible U.S. interest rate cut in December, all of which are further deteriorating investor sentiment.
As a result, trading volume is also showing a marked decline. The average daily trading volume in the first week of this month was 21.9 trillion won, which fell to 16.6 trillion won in the second week, and has further decreased to an average of 13.9 trillion won over the two trading days of the third week. Jeong Hae-chang, a researcher at Daishin Securities, explained, "Despite net selling by foreigners and institutions amounting to only 500 to 600 billion won yesterday, the KOSPI still recorded a decline of more than 3%." He continued, "Trading volume stood at 14 trillion won, which is significantly reduced compared to the peak of nearly 30 trillion won on November 5. This indicates a market environment where volatility is increasing even with lower trading volumes." He added, "This liquidity contraction phase is expected to peak as the market digests the minutes of the U.S. Federal Open Market Committee (FOMC) meeting on November 20, the end of quantitative tightening (QT) on December 1, and the December FOMC meeting on December 10, amid ongoing monetary policy uncertainty."
Meanwhile, the market is closely watching Nvidia's earnings report, which is due in the early hours of November 20. The key question is whether the results can dispel the AI bubble concerns and reverse the prevailing negative market sentiment. One researcher noted, "This earnings release will be watched not only for whether results and guidance exceed market expectations, but also for improvements in gross profit margin (GPM) and whether the impact of export restrictions on H20 chips to China is offset. There are more key points to watch than before. Given that global markets are more focused on Nvidia's earnings than ever, the process of interpreting and reassessing the results is likely to be frequent after the announcement. Therefore, it is necessary to prepare for the possibility of temporarily heightened overall market volatility."
There is also a possibility that the correction could deepen further. Noh Donggil, a researcher at Shinhan Investment Corp., stated, "Signs of a market correction have become more pronounced recently, marking the first significant correction in this mid-term upward cycle." He continued, "The issue is that there remains a possibility of a sharp price correction. Recently, investor sentiment has been even more negative than the index adjustment itself, and there have been cases where corrections deepened over time. Currently, the KOSPI is down about 6% from its peak, indicating that it is still in the early stages of a correction."
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