Seoul:South Korean shares fell by more than 3 percent on Friday, driven by a significant sell-off in semiconductor stocks amid ongoing concerns over the sustainability of investments in artificial intelligence (AI). During this period, the Korean won gained strength against the U.S. dollar.
According to Yonhap News Agency, the benchmark Korea Composite Stock Price Index (KOSPI) dropped 206.92 points, or 3.48 percent, settling at 5,730.74 after reaching an intraday low of 5,599.42. The KOSPI, which opened nearly 3 percent lower, continued to decline, leading the Korea Exchange to activate a sell-side sidecar shortly after 10 a.m. This mechanism is triggered when the KOSPI 200 Futures Index decreases by 5 percent or more for at least one minute.
The sell-off was influenced by overnight losses on Wall Street, where investor sentiment was dampened by high valuations related to AI. Google parent Alphabet experienced a drop of more than 12 percent after its third-quarter revenue, which increased by 25 percent year-on-year to $127.58 billion, fell short of market expectations, raising concerns about returns on large-scale AI investments.
The tech-heavy Nasdaq Composite Index fell 1.38 percent, and the Philadelphia Semiconductor Index decreased by 1.4 percent, affecting sentiment toward South Korean chipmakers. The trading volume was light, with 212.76 million shares valued at 19.27 trillion won ($14.44 billion) changing hands, and decliners significantly outnumbered advancers 655 to 232. Foreign investors sold a net 1.62 trillion won, while institutions and individuals purchased a net 742.55 billion won and 620.97 billion won, respectively.
"Investors sold shares of AI-related companies following a series of weaker-than-expected third-quarter earnings reports from major tech firms and chipmakers, while persistent concerns over the sustainability of AI-driven growth further impacted sentiment," stated Kang Jin-hyuk, an analyst at Samsung Securities. Most KOSPI heavyweights saw declines, with Samsung Electronics dropping 3.02 percent to 225,000 won and SK hynix decreasing 7.08 percent to 1.42 million won.
In the automotive sector, Hyundai Motor fell 3.59 percent to 282,000 won after adjusting its annual sales target and investment plans. Kia also experienced a significant decline of 11.73 percent to 95,600 won following weaker-than-expected third-quarter operating profit reports. Hanwha Aerospace, a defense firm, saw its shares slump 8.42 percent to 696,000 won due to delays in deliveries of K9 self-propelled howitzers to Poland.
By 330 p.m., the Korean won was trading at 1,334.3 against the U.S. dollar, marking an increase of 5.2 won from the previous session's close. Bond prices, which move inversely to yields, ended higher, with the yield on three-year Treasurys decreasing by 5.1 basis points to 3.715, and the return on five-year government bonds shedding 5.8 basis points to 3.865.