October 2026: AI Investment Returns and Rising Concerns about US Interest Rate Hikes Cause Continued Plunge in Korean Stocks
1. Main Triggers:
① Concerns about AI investment returns coupled with expectations of a Fed rate hike;
② Rising international oil prices exacerbated inflationary pressures, leading to a concentrated withdrawal of foreign capital and intensifying downward pressure on Korean stocks.
2. Government Response:
On October 15th, an emergency stock market inspection meeting was held to strengthen market monitoring, focusing on the flow of foreign and institutional funds; securities companies were required to avoid unrestrained expansion of credit financing; a crackdown on market manipulation, illegal short selling, and the spread of false information was announced; and preparations were made to activate emergency market stabilization plans if necessary. However, no new large-scale direct stock purchase measures were announced to rescue the market.
3. Effects of Measures:
On October 16th, the KOSPI rebounded 2.05%, ending a seven-day losing streak. However, the rebound was also influenced by factors such as the Fed Chairman's positive assessment of the AI outlook and bargain hunting in semiconductor stocks. The market remained under pressure thereafter, with the KOSPI falling 16.19% for the month.
November 2026: US Midterm Elections Spark AI Regulatory Concerns
1. Key Triggers:
① Democratic victory in data center hubs fueled market concerns about stricter regulations;
② A collective plunge in US tech and semiconductor stocks dragged down the Korean stock market;
③ Foreign investors and hedge funds concentrated on adjusting their positions.
2. Government Response:
On November 6th, the government held an emergency market inspection meeting, announcing a temporary relaxation of collateral requirements for securities financing transactions starting November 9th to reduce forced liquidations triggered by falling stock prices. It also emphasized strengthened monitoring and prepared to implement additional market stabilization measures if volatility further intensifies.
3. Effects of Measures:
On November 6th, the KOSPI fell as much as 8.8% intraday, before narrowing its losses to close down 6.02%, indicating that selling pressure had not yet subsided. Since the 140% collateral exemption measure will not officially take effect until November 9th, the intraday rebound on November 6th cannot be considered a sign that the new policy has already had a real effect. Whether this measure can reduce forced liquidation and alleviate stock market sell-offs remains to be seen in subsequent trading days.
