South Korea's Kospi dropped 3.73% on Tuesday, led by SK Hynix and Samsung Electronics, a day after the Nasdaq rose 1.1%. Elice, which sold shares at 90,500 won, traded as low as 61,400 won in its debut. Nasdaq 100 futures slipped about 0.4% ahead of results from Netflix and SpaceX tonight and Meta and Tesla on Wednesday.
Monday's rally in U.S. technology shares was built on the idea that last week's selling had gone too far. South Korea's chip-heavy stock market rejected that idea before New York opened again.
The Kospi fell 215.27 points, or 3.73%, to 5,552.74 on Tuesday. SK Hynix lost about 4.2% and Samsung Electronics about 3%. Foreign investors were net sellers of about 530 billion won of Korean shares and domestic institutions of about 1 trillion won, while individual investors bought about 898 billion won, according to exchange flow data. The close was a fraction below the 5,554.22 at which the index ended on Oct. 15, the day it fell 7.57%, and about 41% below its June peak of 9,385.59, by this publication's arithmetic.
The selling spread. Japan's Nikkei 225 fell 1.3% to 64,075.42, with SoftBank Group down about 6% and Tokyo Electron about 2.6% at the close. In Europe, the Stoxx 600 was down about 0.6% by mid-morning, and chip-equipment makers ASML and ASM International fell about 3%.
A listing that broke
The sharpest signal came from the primary market. Elice, a South Korean data-center company, priced its Kosdaq listing at 90,500 won a share, the top of its marketed range, raising about 201 billion won, or roughly $151 million. It was the exchange's largest initial public offering of the year. On its first day of trading, the stock fell as much as 32%, to 61,400 won.
Elice is not the only data-center issuer to meet resistance. In Australia, Firmus Grid shelved its Sydney listing, and AirTrunk delayed a planned real estate investment trust offering in Singapore.
That matters because the AI build-out runs on outside capital. When investors bid a deal to the top of its range and then sell it a third lower on the first day, the next company to come to market can expect a harder conversation on price. Ninghui Liu, head of investment strategy and research for Asia Pacific at State Street Investment Management, framed the question this way to Reuters: "Investors are fine with AI being used more. What they're questioning is whether every dollar of AI capex earns more than it costs to finance."
The U.S. side
On Wall Street, the mood turned before the open. Nasdaq 100 futures were down about 0.4% early Tuesday after the Nasdaq Composite rose 1.1% and the S&P 500 0.4% on Monday, ending a week of declines in technology shares. S&P 500 futures were roughly flat and Dow futures up about 0.2%. Micron was down about 2.2% in premarket trading and Intel about 1.2%.
CoreWeave, whose borrowing has made it the market's test case for AI debt, was down about 4% before the bell. On Monday it hit a 52-week low and closed fractionally lower despite an upgrade from Goldman Sachs. Last week, its five-year credit default swaps reached levels that S&P Global associates with distress, CNBC reported, and yields on Oracle's debt have stayed elevated.
Two ways to read Seoul
The Kospi is heavily weighted toward two memory makers, which makes it a concentrated bet on the AI hardware cycle. A one-day drop of nearly 4% can reflect positioning as much as a change in outlook. The won also argues against a flight of capital: it traded near 1,330 per dollar, its strongest level in two years, supported by chip exports.
Market implications
If the problem is funding, the signs are lining up. An IPO priced at the top of its range broke on its first day, other data-center listings have been shelved or delayed, and the credit of a heavily indebted AI cloud provider reached distressed levels last week. On that view, the cost of capital for the build-out is rising.
If the problem is local, the signs point elsewhere. U.S. technology stocks rebounded on Monday, the won is strong, and one small-cap debut may say more about a deal priced at the top of its range than about the sector.
What to watch
Netflix's and SpaceX's results after Tuesday's close; Meta, Tesla, IBM and Lam Research on Wednesday; and Elice's second session. Options prices imply post-earnings moves, according to TipRanks data, of about 12% for Meta, 9.6% for Netflix, 8.4% for Lam Research and 7.4% for Tesla. A Meta spending forecast that holds or rises, followed by another failed rally in Seoul, would suggest investors are questioning the financing rather than the demand.