South Korea's stock market reopens on Monday, 9 November, after one of its worst weeks in years, with investors watching whether the KOSPI can steady itself following a Black Friday rout that forced trading to a halt.

The benchmark index closed on Friday at 5,059.69, down 324.11 points, or 6.02%, after falling as low as 4,911.28 during the session. The drop was so sharp that the exchange triggered a circuit breaker, halting trading for 20 minutes just three minutes into the session after the index broke below the 5,000 mark. Across Thursday and Friday, the KOSPI plunged 11%.

The selling was concentrated in the two stocks that dominate the index. Samsung Electronics fell more than 6% in local trading on Friday, while SK Hynix dropped more than 10%. Together, the two chipmakers make up nearly half of the KOSPI, so their falls dragged the whole market down with them.

The immediate trigger was concern that a landslide Democratic victory in the United States midterm elections would bring tighter regulation of artificial intelligence data centres. Investors feared stricter rules could delay orders for servers and semiconductors, and chip and electronics shares wobbled across the board. Over the same two sessions, the Nasdaq fell more than 5% and the Philadelphia Semiconductor Index dropped about 12%.

There are early signs of breathing room. In the weekend session in New York, chip stocks rebounded first, with the Philadelphia Semiconductor Index up more than 4%. Song Jae-kyung, head of the investment division at Dimension Investment Advisory, said that for the stocks that had fallen too far, some recovery next week had to be left open as a possibility.

Even so, few expect the volatility to end quickly. Foreign investors recorded more than 10 trillion won, approximately $7.3 billion, in net selling last week, and analysts say the market needs uncertainty about the United States to ease before overseas money returns. Kim Doo-un, a senior research fellow at Hana Securities, said investors could only invest abroad once conditions at home were reasonably stable.

Arthur Budaghyan, chief emerging markets strategist at BCA Research, warned that Korean and Taiwanese markets remain vulnerable because domestic retail investors, who have been major buyers over the past nine to twelve months, have not yet capitulated. Actions by the authorities are unlikely to prevent liquidation by retail investors driven by momentum, he said, and momentum has turned very negative for these stocks.

Jun Kwang-woo, chairman of the Institute for Global Economics in Seoul and a former chairman of South Korea's National Pension Service, took a calmer view, saying the market may have overreacted to the midterm outcome and that it should stabilise very soon. He noted that the speed of building AI infrastructure, especially data centres, may slow a little because of concerns in many states, including Texas, where the governor-elect has called for an immediate moratorium on data centres.

The scale of the fall is stark. According to Goldman Sachs, the KOSPI has fallen more than 44% from its peak in June, tracking closely to the index's previous biggest drawdowns, including the 52% fall during the bursting of the dot-com bubble and the 53% drop during the global financial crisis. Goldman analysts said that while current valuations and earnings quality are higher now, further downside to 50% cannot be ruled out.

South Korean authorities have already moved to steady the market, easing margin rules after the rout. The biggest test of whether Monday's reopening marks a genuine turn or only a pause comes on Tuesday, when the United States releases its October consumer price index at 8:30 a.m. Eastern Time. A softer reading could ease worries about high interest rates and support growth stocks; a strong one could add rate pressure to the existing fears about slowing AI investment.

For now, the reopening is a test of nerve. The market has put out the immediate fire, but no conclusion has been reached on whether the rebound is a trend reversal or a technical bounce, and sector-by-sector divergence is likely to continue until the shape of United States policy and the inflation data are confirmed.