Seoul: Seoul shares fell by more than 2 percent Tuesday, snapping their five-day winning streak, as investors moved to take profit after a record-breaking run amid an impasse in peace negotiations between the United States and Iran. The local currency sharply fell against the U.S. dollar. After rising as high as 7999.67 shortly after the opening bell, the benchmark Korea Composite Stock Price Index (KOSPI) fell 179.09 points, or 2.29 percent, to close at 7,643.15. The index fell as low as 7,423.11.

According to Yonhap News Agency, the trade volume was heavy at 1.02 million shares worth 66.6 trillion won (US$44.8 billion), with losers outnumbering winners 731 to 145. Foreign investors sold off local shares worth a net 5.6 trillion won for the fourth consecutive day, while institutions offloaded 1.2 trillion won. Retail investors, on the other hand, purchased 6.68 trillion won.

Market analysts kept an eye on whether the KOSPI might reach the unprecedented 8,000-point level, driven by a sustained rally of major tech stocks such as Samsung Electronics and SK hynix, fueled by optimism surrounding artificial intelligence (AI). However, the index lost momentum due to profit-taking and diminished hopes for an end to the U.S.-Israeli conflict with Iran.

Earlier in the day, former President Trump mentioned considering the renewal of "Project Freedom," a plan aimed at assisting stranded vessels in the Strait of Hormuz. He also described the ceasefire with Iran as being on "massive life support" and dismissed Iran's peace offer as a "piece of garbage."

Lee Kyoung-min, an analyst at Daishin Securities, noted, "As the KOSPI's recent rally was largely driven by the strong performance of large-cap semiconductor stocks, the index is experiencing a pullback as investors are moving to take profit." He added that the sharp decline in major U.S. tech shares, including Micron and SanDisk, during after-hours trading eroded investors' risk appetite.

Comments by Seoul's presidential policy chief Kim Yong-beom on profit sharing in the AI era also impacted investor sentiment. "The fruits from the AI infrastructure era are not generated by only a handful of companies," Kim stated on social media, suggesting a "national dividend system."

Samsung Electronics, a market leader, closed 2.28 percent lower at 279,000 won, while its competitor SK hynix lost 2.39 percent to 1.84 million won. AI investment firm SK Square fell 5.14 percent to 1.13 million won, and Samsung C and T dropped 3.76 percent to 435,000 won.

The leading battery manufacturer LG Energy Solution saw a decline of 5.34 percent to 443,000 won, and smaller rival Samsung SDI plunged 8.04 percent to 629,000 won. Electrical and shipbuilding shares presented mixed results. HD Hyundai Electric decreased 3.89 percent to 1.3 million won, and LS Electric dipped 4.93 percent to 289,000 won, but Samsung Electro-Mechanics surged 6.44 percent to 958,000 won.

Major shipbuilder Hanwha Ocean contracted 6.51 percent to 122,000 won, and HD Korea Shipbuilding went down 2 percent to 464,500 won, while HD Korea Shipbuilding jumped 3.21 percent to 707,000 won. Notably, home appliances maker LG Electronics skyrocketed 18 percent to 184,900 won, driven by expectations for its robotics business.

The Korean won was quoted at 1,489.9 won against the U.S. dollar at 3:30 p.m., sliding 17.5 won from the previous session, impacted by the significant foreign sell-off of Korean stocks.