Seoul: South Korean stocks ended more than 2 percent lower on Wednesday as investors locked in gains following recent artificial intelligence-fueled rallies in semiconductor shares, amid uncertainty over fragile U.S.-Iran peace talks. The Korean won weakened against the U.S. dollar. The benchmark Korea Composite Stock Price Index (KOSPI) lost 173.07 points, or 2.04 percent, to close at 8,303.41.
According to Yonhap News Agency, overnight, U.S. stocks closed higher on a continued chip rally, while investors closely monitored developments regarding peace talks between Washington and Tehran. On Tuesday, Iran announced it would not meet with top U.S. envoys who had flown to the region following recent hostilities near the Strait of Hormuz, even as indirect talks continued through mediators in Qatar.
Despite robust export data released earlier in the day, chip heavyweights weighed on the broader market. South Korea's exports reached a record high in June, surpassing the US$100 billion mark for the first time, primarily driven by record semiconductor shipments.
Trade volume was heavy at 396.59 million shares worth 67.84 trillion won (US$43.59 billion), with winners outnumbering losers 699 to 191. Foreigners and institutions sold a net 1.7 trillion won and 70.48 billion won, respectively, while individuals bought a net 1.73 trillion won.
"Foreigners extended their net selling after heavy selling in June, continuing to take profits from the recent rally in semiconductor stocks," said Han Ji-young, an analyst at Kiwoom Securities. Tech heavyweights, including market bellwether Samsung Electronics and chip giant SK hynix, saw significant declines.
While Samsung Electronics fell 5.84 percent to 314,500 won, SK hynix declined 3.4 percent to 1.56 million won. However, power equipment shares gained on expectations of increased infrastructure investment for semiconductor clusters and artificial intelligence data centers under the government's latest investment plan. LS Electric jumped 10.71 percent to 263,500 won, and HD Hyundai Electric rose 4.12 percent to 1.01 million won.
The Korean won was quoted at 1,554.9 won per U.S. dollar as of 3:30 p.m., down 5.5 won from the previous session. Bond prices, which move inversely to yields, closed lower. The yield on three-year Treasurys added 8.8 basis points to 3.791 percent, and the return on the benchmark five-year government bonds rose 10.3 basis points to 4.028 percent.