Seoul:South Korean shares plummeted more than 3 percent on Thursday as investors engaged in profit-taking on major chip shares following a previous session rebound. This decline occurred amidst ongoing concerns regarding investments in the artificial intelligence (AI) value chain. Concurrently, the Korean won strengthened against the U.S. dollar.
According to Yonhap News Agency, the Korea Composite Stock Price Index (KOSPI) fell by 201.8 points, or 3.52 percent, closing at 5,533.77. The index had initially opened down 1.14 percent but briefly turned positive, reaching an intraday high of 5,740.28 before resuming its decline with sharp losses.
The KOSPI had previously rebounded over 3 percent, recovering from substantial losses as semiconductor shares rallied. In contrast, U.S. stocks ended mixed overnight, with AI-related shares recovering following SpaceX's quarterly results. The Dow Jones Industrial Average increased by 0.69 percent, the S&P 500 gained 0.58 percent, and the tech-heavy Nasdaq Composite advanced 1.05 percent.
Meta Platforms boosted its investment in the AI sector after reporting robust earnings. However, analyst Lee Kyoung-min from Daishin Securities noted that despite Meta and Tesla reporting earnings exceeding market expectations, concerns over profitability amid large AI investments persisted. He also mentioned that the end of SK hynix's share buyback program contributed to widening KOSPI's losses by reducing market demand support.
The trade volume was light, with 201.17 million shares worth 13.7 trillion won (US$10.4 billion) changing hands. Decliners significantly outnumbered advancers, with 706 stocks falling compared to 174 rising. Foreigners and individuals purchased a net 6.1 billion won and 38.1 billion won, respectively, while institutions sold off a net 46.3 billion won.
Market heavyweights experienced widespread declines, particularly in technology shares. Samsung Electronics, a market bellwether, fell 4.03 percent to close at 214,500 won, while rival chipmaker SK hynix dropped 5.49 percent to 1.22 million won. Samsung Electro-Mechanics decreased by 1.97 percent to close at 1.15 million won, despite opening higher on news of its partnership with Nvidia.
The Korean won was quoted at 1,324.2 won against the U.S. dollar as of 330 p.m., up 1 won from the previous session's close. Bond prices closed lower, with the yield on three-year Treasurys increasing by 1.8 basis points to 3.840, and the benchmark five-year government bonds' yield rising by 1.9 points to 3,983.