Seoul:South Korean stocks experienced a significant downturn on Thursday, with the benchmark Korea Composite Stock Price Index (KOSPI) plummeting more than 7 percent. This decline was fueled by continued losses in major chipmakers amidst rising concerns about the viability of artificial intelligence (AI) investments and potential interest rate hikes by the Federal Reserve. The Korean won also weakened against the U.S. dollar.
According to Yonhap News Agency, the KOSPI initiated the day 5.59 percent lower and continued to fall, closing down 454.59 points, or 7.57 percent, at 5,554.22, after reaching a low of 5,450.81. This marked the index's seventh consecutive session of losses, the longest losing streak since September 2024.
The rapid sell-off led the Korea Exchange (KRX) to implement a sell-side sidecar shortly after trading commenced, pausing program selling for five minutes as KOSPI 200 futures dropped more than 5 percent for at least one minute. As the situation worsened, a circuit breaker was triggered at 1238 p.m., suspending the main bourse trading for 20 minutes following an over 8 percent drop from the previous session's close.
In the U.S., stock markets closed lower overnight due to renewed concerns about AI-related spending and unexpectedly high inflation data for September. The U.S. Consumer Price Index (CPI) increased by 0.6 percent in September, marking its fastest monthly rise since April and heightening fears of persistent inflation potentially leading to further Federal Reserve interest rate hikes.
Trade volume on the KOSPI was moderate with 363.47 million shares worth 26.87 trillion won (US$19.97 billion) changing hands. Decliners significantly outnumbered advancers, with 787 stocks falling and 112 rising. Foreign investors sold a net 3.62 trillion won, while institutions and individual investors purchased net amounts of 1.69 trillion won and 1.29 trillion won, respectively.
Analyst Lee Kyoung-min from Daishin Securities noted that the KOSPI faced substantial selling pressure due to concerns over AI investment sustainability, intensifying competition in memory chip production, and increasing borrowing costs. Semiconductor shares, along with IT hardware and power equipment stocks, experienced declines as investor sentiment weakened across the broader AI value chain. Key market players suffered major losses, with Samsung Electronics dropping 9.48 percent and SK hynix falling 11.06 percent. SK Square and Samsung Electro-Mechanics also saw significant declines of 10.21 percent and 15.36 percent, respectively. The Korean won was quoted at 1,344.6 won against the U.S. dollar as of 330 p.m., down 2.3 won from the previous session’s close.