[DigitalToday reporter Sangyeop Oh (오상엽)] South Korea's KOSPI plunged more than 3% on selling by foreign investors and institutions, falling to the 5,500 level. With uncertainty lingering over investment and profitability in the artificial intelligence industry, most of the top market-cap stocks, including semiconductor heavyweights, declined.

On Oct. 20, the KOSPI ended down 215.27 points, or 3.73%, at 5,552.74 from the previous session. The index opened weaker and extended losses during the morning. It later attempted a partial rebound but slipped again in the afternoon, closing near the day's low.

Foreign investors and institutions led the decline in flows. Foreigners posted net sales of 530.3 billion won in the main board market, while institutions sold a net 1.0052 trillion won. Retail investors, in contrast, bought a net 898.9 billion won, absorbing supply.

Top market-cap stocks were also broadly lower. Samsung Electronics ended down 2.98% at 211,500 won, while SK Hynix fell 4.23% to close at 1,223,000 won.

Elsewhere, SK Square fell 5.00%, LG Energy Solution lost 4.17%, Hyundai Motor declined 4.91%, Samsung Biologics fell 2.52%, KB Financial Group slipped 1.11%, Samsung Life dropped 3.07% and Samsung Electro-Mechanics fell 1.28%.

The Kosdaq also fell. It closed down 26.92 points, or 3.33%, at 781.97 from the previous session.

The dollar-won exchange rate was 1,327.90 won, down 5.60 won from the previous session.

Investor sentiment surrounding equities shrank again on concerns over the sustainability of investment in the AI industry and the outlook for semiconductor companies' earnings. Uncertainty over credit and the investment cycle around CoreWeave, Chinese memory makers catching up in technology and the possibility of reduced investment by U.S. big tech companies have been weighing on semiconductor shares.

The dollar-won exchange rate falling below 1,330 was also cited as a factor prompting caution over exporters' earnings. With exporters' dollar-selling affecting the decline in the exchange rate, an analysis said that if the won's strength persists, it could weigh on exporters' fourth-quarter earnings when translated into won.

Han Ji-young (한지영), a researcher at Kiwoom Securities, cited uncertainty in the credit and investment cycle for AI stocks stemming from CoreWeave and doubts about future earnings and profitability in the semiconductor sector as reasons behind the market's recent weakness.

Han said, "To turn around deteriorated sentiment, it seems necessary to have the perception that stock prices have fallen enough and to ease distrust surrounding the earnings of leading stocks," adding, "At the current point, I think it is right to change strategy after checking the third-quarter earnings season for non-face-to-face."