Key facts
- South Korean stocks fell over 4% on Thursday due to losses in tech shares.
- The benchmark KOSPI index closed down 4.58% at 6,296.38.
- Samsung Electronics fell 6.3% and SK hynix plunged 10.37%.
- Foreign investors sold a net 3.33 trillion won of stocks.
- The Korean won strengthened slightly against the U.S. dollar.
Seoul's stock market experienced a significant downturn on Thursday, with the benchmark Korea Composite Stock Price Index (KOSPI) falling 4.58% to close at 6,296.38. The decline was primarily driven by substantial losses in technology shares, fueled by ongoing concerns about the profitability of large-scale investments in artificial intelligence (AI) infrastructure.
The KOSPI opened 1.81% lower and continued to slide, prompting the activation of a sell-side sidecar by the bourse operator, which temporarily halted program trading. Trading volume was relatively light, with foreign investors being net sellers of 3.33 trillion won worth of stocks, while individual investors were net buyers.
Overnight, U.S. markets saw tech-heavy Nasdaq Composite decline by 0.83% due to doubts surrounding AI spending profitability, impacting major companies like Alphabet and Advanced Micro Devices. In contrast, the Dow Jones Industrial Average reached a new record high, buoyed by easing Middle East tensions.
Analysts noted that despite improvements in geopolitical and macroeconomic conditions, the KOSPI lost momentum due to the slump in U.S. chip stocks and profit-taking. However, some believe that concerns over AI spending may have peaked following recent earnings reports from major tech firms.
Semiconductor stocks were particularly hard-hit, with Samsung Electronics dropping 6.3% and SK hynix plunging 10.37%. Other notable decliners included SK Square, down 13.32%, and Samsung Electro-Mechanics, down 9.37%. Shipbuilders and retailers also saw losses, while defense and pharmaceutical sectors experienced gains.
The South Korean won showed a slight appreciation against the U.S. dollar, closing at 1,423.8 won.