Seoul:South Korean shares fell by more than 3 percent on Friday, primarily due to a significant sell-off in semiconductor stocks. This downturn was influenced by persistent concerns regarding the sustainability of investments in artificial intelligence (AI). Meanwhile, the Korean won showed 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, closing at 5,730.74. The index had earlier fallen to a low of 5,599.42. Starting the day nearly 3 percent down, KOSPI's losses intensified, triggering the Korea Exchange to activate a sell-side sidecar. This mechanism is employed when the KOSPI 200 Futures Index experiences a drop of 5 percent or more for at least a minute.

The sell-off was preceded by losses on Wall Street, where investor sentiment was dampened by concerns over high valuations related to AI. Alphabet, Google's parent company, saw its stock tumble over 12 percent after reporting a 25 percent year-on-year increase in third-quarter revenue to $127.58 billion, which fell short of market expectations, thereby raising doubts about returns on substantial AI investments.

The technology-heavy Nasdaq Composite Index decreased by 1.38 percent, while the Philadelphia Semiconductor Index declined by 1.4 percent, exerting negative pressure on sentiment towards South Korean chip manufacturers.