Kospi tumbles ~5% a day after record surge as foreigners, institutions sell

The Kospi, which had just posted its largest-ever single-day gain, gave back nearly 5 percent on Monday as the market paused to catch its breath.

Profit-taking by foreign and institutional investors weighed heavily on large-cap technology stocks, with Samsung Electronics and SK Hynix leading the index lower. Retail investors stepped in as buyers, net purchasing more than 1 trillion won ($694 million) in an attempt to cushion the fall. Positive momentum from Wall Street was not enough to offset the wave of selling.

According to Korea Exchange, the Kospi opened Monday down 237.18 points, or 3.60 percent, at 6,358.27 and extended its losses through the session, at one point sliding as low as 6,247.64. The previous session had seen the index rebound from three consecutive days of steep declines, surging 1,001.89 points, or 17.91 percent, to close at 6,595.45 — both the largest single-day point gain and percentage gain on record. The index reversed course just one trading day later.

Foreign and institutional investors drove the decline. Foreigners net sold 991.4 billion won on the Kospi, while institutions net sold 77.9 billion won, pulling the index lower. Retail investors net bought 1.04 trillion won on the day. The reversal was striking: the previous session had seen foreigners net buy a record 7.28 trillion won on the Kospi, only to flip to net sellers the following day.

The selloff came despite a positive session on Wall Street on Friday. Strong earnings from Amazon lifted technology shares, pushing all three major US indexes higher. The Dow Jones Industrial Average rose 0.53 percent and the S&P 500 gained 0.70 percent, while the NASDAQ Composite climbed 1.00 percent.

Amazon reported quarterly sales topping $200 billion for the first time, driven by cloud business growth, sending its shares surging 15.32 percent. The upbeat results improved sentiment toward technology stocks broadly — Nvidia gained 2.93 percent and reclaimed the top spot by market capitalization for the first time in four sessions, while Broadcom rose 0.37 percent. SK Hynix's American depositary receipts, however, fell back 3.54 percent after surging 17.5 percent the previous session.

Tensions between the United States and Iran also eased over the weekend. President Donald Trump abruptly called off a planned military operation against Iran late Saturday local time, scrapping an action that had been expected over the weekend. West Texas Intermediate crude futures were trading down 4.43 percent at $80.92 per barrel as a result.

Even so, domestic stocks remained under pressure from profit-taking following the previous session's outsized gains. SK Hynix, which had hit the daily upper limit the session before, tumbled 7.33 percent, falling below the 1.6 million won level. Samsung Electronics, which had surged more than 26 percent the previous session, dropped 7.05 percent. Both stocks later extended their declines to around 8 percent.

The Kosdaq opened down 9.77 points, or 1.36 percent, at 709.99, at one point falling as low as 705.07 before trimming some losses. The previous session had seen the Kosdaq close up 11.63 percent at 719.76, the second-largest single-day percentage gain on record, but the index reversed Monday. Foreign investors net sold 31.7 billion won on the Kosdaq, institutions net sold 62.2 billion won, and retail investors were net buyers of 98.4 billion won.