South Korea's stock market experienced its largest foreign sell-off since records began in 1998, with the KOSPI index plunging nearly 4%. Despite individual investors making a record net purchase of 7.6 trillion won, the market decline could not be halted.

Data shows that on Thursday, foreign investors net sold 5.0103 trillion won (34 billion USD) worth of stocks composing the Korea Composite Stock Price Index, setting a record high. Of this, sell-offs in the main board market exceeded 5 trillion won, while the KOSDAQ market saw nearly 300 billion won in net selling. The previous record for foreign net selling was 3.0304 trillion won on February 26, 2021.

This wave of selling was triggered by concerns over an artificial intelligence bubble, following a broad decline in U.S. tech stocks in the previous trading session, which directly impacted the South Korean market. Foreign investors focused their selling on semiconductor stocks, with Samsung Electronics and SK Hynix bearing the brunt.

KB Securities analyst Lim Jeong-eun noted that approximately 4.3 trillion won of the foreign net selling was concentrated in the electrical and electronics sector, leading to significant declines in related stocks.

The foreign sell-off in semiconductors swept through the market.

The KOSPI index closed down 3.86% at 5,163.57 points. Foreign investors recorded a net sell of 5.0103 trillion won in the main board market and showed a net short position exceeding 1 trillion won in KOSPI 200 futures.

Leading semiconductor stocks were hit hard. SK Hynix, SK Square, and Doosan Enerbility fell by 6%, while Samsung Electronics and HD Hyundai Heavy Industries dropped over 5%. Hanwha Aerospace plummeted 7.33%. Hyundai Motor declined 3.08%, LG Energy Solution fell 1.86%, and Kia dropped 0.38%.

Institutional investors also chose to exit, selling 2.0692 trillion won worth of stocks, which intensified the downward pressure on the market.

Faced with selling pressure from both foreign and institutional investors, individual investors continued their strategy of buying against the trend. Retail investors made a net purchase of 6.7785 trillion won, setting a new record high following the activity two days prior, indicating strong willingness to buy at perceived lows. However, this record level of buying was insufficient to offset the combined selling pressure from foreign and institutional investors, which totaled over 7 trillion won, resulting in declines across large-cap stocks on the main board.

The KOSDAQ market also experienced a sharp decline.

The KOSDAQ index closed at 1,108.41 points, down 41.02 points, a decrease of 3.57%. Foreign investors net sold 2.8613 billion won in this market, while institutions sold 539.9 billion won. Individual investors net purchased 903.4 billion won.

Top market-cap KOSDAQ stocks all fell. Sam Chun Dang Pharm dropped 7.88%, Rainbow Robotics declined 6.08%, and EcoPro, EcoPro BM, Alteogen, and HLB fell by approximately 4% each. ABL Bio, LEENO Industrial, and Kolon TissueGene decreased by 3.37%, 2.55%, and 0.50% respectively.

This sell-off reflects that global investor concerns about AI valuations are spreading from the U.S. market to Asian tech stocks, with South Korea, as a semiconductor hub, facing significant pressure.