Seoul: South Korean shares plunged by nearly 3 percent Wednesday as big-cap tech shares slid, tracking an overnight slump on Wall Street sparked by concerns over an artificial intelligence (AI) bubble. The Korean won sharply lost ground against the U.S. dollar.
According to Yonhap News Agency, the benchmark Korea Composite Stock Price Index (KOSPI) lost 117.32 points, or 2.85 percent, to close at 4,004.42, after dipping to as low as 3,867.81 at one point, retreating back below the 4,200 mark just two days after reaching the milestone. The tech-heavy secondary KOSDAQ fell 16.54 points, or 2.84 percent, to end at 565.4.
Due to the steep fall, the bourse operator issued a sidecar at around 9:46 a.m. and halted program sell orders for five minutes, after the KOSPI 200 futures shot down more than 5 percent for more than one minute. At around 10:26 a.m., a sidecar for program selling for KOSDAQ shares was also issued. It marked the first time since April 7 the bourse operator issued a sidecar for stock selling on the KOSPI and the first time since Aug. 5 of last year it did so on the KOSDAQ.
Trading volume was heavy at 583.5 million shares worth 28.5 trillion won (US$19.7 billion), with losers outnumbering winners 730 to 173. Foreigners and institutions dumped local shares worth 2.5 trillion won and 79.3 billion won, respectively, offsetting retail investors' net purchase of 2.57 billion won.
"AI-related tech shares have driven the recent rally in the stock market, but investors are increasingly questioning when companies' massive AI investments will start generating tangible profits," Samsung Securities said in a report on the KOSPI's slide. "Remarks from global investment bank CEOs about a possible overvaluation of AI stocks sparked a wave of profit-taking, particularly in the tech sector," it added.
Overnight, major U.S. indexes closed lower as blue chip tech shares lost ground amid concerns surrounding an AI bubble. The Dow Jones Industrial Average lost 0.53 percent, the tech-heavy Nasdaq composite shed 2.04 percent, and the S and P 500 went down 1.17 percent. AI chip giant Nvidia went down 3.96 percent, Micron slid 7.1 percent, Intel tumbled 6.25 percent, and Palantir shot down 7.94 percent.
In Seoul, most big-cap stocks posted big losses, reversing their recent rally. Market bellwether Samsung Electronics sank 4.1 percent to 100,600 won, and its chipmaking rival SK hynix dipped 1.19 percent to 579,000 won. Leading carmaker Hyundai Motor pulled back 2.72 percent to 268,500 won, and defense giant Hanwha Aerospace contracted 5.94 percent to 950,000 won. Power plant builder Doosan Enerbility shot down 6.59 percent to 83,600 won, and electric equipment builder HD Hyundai Electric nosedived 5.45 percent to 868,000 won.
Shipbuilders also lost ground, with HD Hyundai Heavy down 6.88 percent to 528,000 won, Hanwha Ocean dropping 7.47 percent to 126,400 won, and HD Korea Shipbuilding falling 6.34 percent to 428,500 won. Internet portal operator Naver was among the few gainers, jumping 4.31 percent to 278,500 won.
The local currency was quoted at 1,449.4 won against the U.S. dollar at 3:30 p.m., sliding 11.5 won from the previous session, the lowest since early April. Bond prices, which move inversely to yields, closed lower. The yield on three-year Treasurys rose 3.8 basis points to 2.767 percent, and the return on the benchmark five-year government bonds added 3.9 basis points to 2.918 percent.