Key facts
- South Korean stocks declined on Thursday morning, with the KOSPI index falling 1.62 percent.
- The market downturn was influenced by a slump in U.S. technology shares and escalating U.S.-Iran geopolitical tensions.
- Major U.S. tech stocks, including Nvidia and AMD, experienced significant drops due to AI stock valuation concerns.
- Concerns over potential U.S. Federal Reserve hawkish policy and Iran's threats regarding the Strait of Hormuz also impacted sentiment.
- Key South Korean companies such as Samsung Electronics and Hyundai Motor saw their share prices fall.
South Korean stocks traded lower late Thursday morning, continuing a trend of volatility driven by concerns over major technology shares and escalating tensions between the United States and Iran. The benchmark Korea Composite Stock Price Index (KOSPI) had fallen 124.91 points, or 1.62 percent, to 7,605.91 as of 11:20 a.m., after opening nearly 3 percent lower.
Overnight, U.S. markets experienced a significant downturn, with the Dow Jones Industrial Average closing 1.87 percent lower, the S&P 500 falling 1.62 percent, and the tech-heavy Nasdaq Composite shedding 1.98 percent. This decline was attributed to investors selling off tech shares amid worries about the high valuations of artificial intelligence (AI) stocks. Major AI chip companies such as Nvidia, Broadcom, Super Micro Computer, and AMD saw substantial drops in their stock prices.
Market sentiment was further dampened by news of additional U.S. strikes against Iran and Iran's threat to fire on vessels passing through the Strait of Hormuz, raising concerns about a potential full-scale war. While the U.S. Consumer Price Index for May came in softer than expected, it was not enough to alleviate worries about a possible hawkish policy shift by the U.S. Federal Reserve, according to Seo Sang-young, an analyst at Mirae Asset Securities.
In Seoul, market heavyweight Samsung Electronics lost 1.49 percent, while its rival SK hynix gained 0.63 percent. Other significant South Korean companies also saw their share prices fall, including Samsung Electro-Mechanics (down 3.38 percent), SK Group (down 2.76 percent), top automaker Hyundai Motor (down 4.32 percent), Kia (down 5.51 percent), auto parts manufacturer Hyundai Mobis (down 4.04 percent), leading battery maker LG Energy Solution (down 1.69 percent), its rival Samsung SDI (down 3.42 percent), power plant manufacturer Doosan Enerbility (down 5.38 percent), and defense giant Hanwha Aerospace (down 5.43 percent).