Seoul: Seoul shares experienced a sharp decline of 9 percent on Monday as investors offloaded technology stocks, seeking profit-taking amidst renewed tensions in the Middle East. The Korean won also weakened against the U.S. dollar.
According to Yonhap News Agency, the benchmark Korea Composite Stock Price Index (KOSPI) dropped by 669.01 points, or 8.95 percent, closing at 6,806.93 after hitting a low of 6,783.43. The trading volume was moderate, with 469.86 million shares valued at 39.8 trillion won (approximately US$26.5 billion) changing hands. Decliners significantly outnumbered gainers, with 713 stocks falling compared to 179 rising.
Institutional and foreign investors sold a net 2.22 trillion won and 1.7 trillion won worth of shares, respectively, while individual investors purchased a net 3.9 trillion won. The KOSPI's losses deepened after an initial 0.85 percent drop at the opening, triggering a circuit breaker that temporarily halted trading of KOSPI-listed stocks for 20 minutes. This marked the seventh activation of such a measure this year.
On the preceding Friday, U.S. stocks saw gains, bolstered by South Korean chipmaker SK hynix's substantial U.S. share offering. The Dow Jones Industrial Average and the Nasdaq Composite both rose by 0.29 percent. SK hynix's American depositary receipts (ADRs) on the Nasdaq closed at US$168 each, surpassing the offering price of $149.
Despite the positive debut in the U.S. market, SK hynix shares dropped as investors took profits and shifted their focus to the company's ADRs. Investor sentiment was further dampened by rising uncertainty in the Middle East following fresh exchanges of strikes between the United States and Iran concerning the Strait of Hormuz.
Samsung Securities noted in a research report that the nation's newly introduced single-stock leveraged exchange-traded funds, linked to Samsung Electronics and SK hynix, continued to drive volatility within the stock market. Technology stocks were at the forefront of the decline.
Leading the market downturn, Samsung Electronics fell 10.7 percent to 254,500 won, while SK hynix saw a 15.37 percent plunge to 1,845,000 won. Among other major companies, Hyundai Motor dropped 2.95 percent to 444,000 won, and Hanwha Aerospace decreased by 3.21 percent to 936,000 won.
Amid the market turmoil, some companies saw gains. LG Energy Solution, a leading battery maker, rose by 0.77 percent, and SK Innovation, a top refiner, climbed 7.09 percent to 110,200 won.
The Korean won was quoted at 1,503.4 won per U.S. dollar at 3:30 p.m., reflecting a decrease of 2 won from the previous session. Meanwhile, bond prices closed lower, with yields moving inversely. The yield on three-year Treasurys increased by 4.1 basis points to 3.809 percent, and the return on the benchmark five-year government bonds rose by 3.3 basis points to 4.041 percent.