Seoul: South Korean stocks closed more than 1 percent lower Monday as investors offloaded technology shares amid uncertainties in the semiconductor and artificial intelligence (AI) sectors. The local currency fell against the U.S. dollar.
According to Yonhap News Agency, the benchmark Korea Composite Stock Price Index (KOSPI) plunged 43.08 points, or 1.35 percent, to close at 3,142.93.
Trade volume was slim at 258.1 million shares worth 7.9 trillion won (US$5.7 billion), with losers outnumbering gainers 692 to 201. Foreign investors sold a net 272 billion won, marking their fifth consecutive session as net sellers, while individual investors purchased a net 346 billion won. Meanwhile, institutions sold a net 193.2 billion won.
Analysts indicated that investor sell-offs in tech stocks were prompted by reports of China's Alibaba developing a new AI chip, stirring fears of potential global market disruptions. Earlier this year, the tech sector experienced a worldwide sell-off following the release of an AI chatbot by Chinese startup DeepSeek.
"Samsung Electronics and SK hynix also led the overall losses following the announcement of new regulation by the U.S. Commerce Department aimed at their units in China," noted Seo Sang-young, an analyst at Mirae Asset Securities. The U.S. plan to revoke Samsung and SK hynix's "validated end-user (VEU)" status will necessitate licenses for exporting specific U.S. chipmaking equipment to their Chinese plants.
During the previous Biden administration, these companies benefited from VEU status, allowing them to ship certain U.S. semiconductor equipment to pre-approved sites under general authorization, bypassing individual export licenses.
Market giant Samsung Electronics fell 3.01 percent to 67,600 won, while SK hynix saw a 4.83 percent decline to 256,000 won. Kakao, known for its popular messenger app KakaoTalk, dropped 2.08 percent to 61,200 won, following a 15-year prison term request for its founder over stock manipulation charges linked to the acquisition of K-pop agency SM Entertainment.
Financial firms also took hits, with KB Financial slipping 1.02 percent to 107,100 won and Shinhan Financial decreasing 1.99 percent to 64,000 won. The local currency was quoted at 1,393.7 won against the greenback at 3:30 p.m., a 3.6 won decrease from the previous session.
Bond prices fell, moving inversely to yields. The yield on three-year Treasurys increased by 0.9 basis points to 2.435 percent, and the yield on benchmark five-year government bonds rose 1.4 basis points to 2.597 percent.