Seoul: South Korean stocks ended their four-day winning streak on Thursday as shares related to artificial intelligence (AI) took a pause following their recent rally, coupled with renewed tensions between the United States and Iran. The benchmark Korea Composite Stock Price Index (KOSPI) fell 43.41 points, or 0.53 percent, to close at 8,185.29, after dipping as low as 7,841.01.
According to Yonhap News Agency, the trade volume was substantial, with 664.5 million shares worth 52.1 trillion won (US$34.7 billion) changing hands, as losers outnumbered winners 676 to 213. Foreign investors and institutions sold off local shares worth 2.9 trillion won and 889.5 billion won, respectively, while retail investors purchased a net 3.6 trillion won. The index had previously closed at a record high of 8,288.7 on Wednesday, extending its winning streak to four sessions on the back of a rally led by major semiconductor shares, including Samsung Electronics and SK hynix. The significant 8,000-point milestone was reached on Tuesday.
The KOSPI's decline occurred as blue-chip shares took a breather after their recent rally due to profit-taking sentiment and news of U.S. military strikes targeting an Iranian site, which dampened hopes for an imminent peace deal between the two countries. In retaliation, Iran targeted a U.S. air base, leading to a spike in global oil prices.
Overnight, major U.S. indexes reached record highs, with the Dow Jones Industrial Average rising 0.36 percent, the Nasdaq composite adding 0.07 percent, and the S and P 500 gaining 0.02 percent. Lee Kyoung-min, an analyst at Daishin Securities, noted that hopes for easing geopolitical risks in the Middle East were a significant factor driving the KOSPI recently. However, renewed tensions and a rise in bond yields following the Bank of Korea's (BOK) rate-setting meeting led to a sharp decline in the index.
Earlier, the BOK had kept its benchmark interest rate unchanged at 2.5 percent for the eighth consecutive time, raising the possibility of future monetary tightening due to inflationary pressures and concerns over currency weakness. In the market, top-cap Samsung Electronics dipped 2.44 percent, while its chipmaking rival SK hynix saw a modest gain of 2.05 percent.
AI investment firm SK Square fell 3.06 percent, and Hanmi Semiconductor dropped 8.31 percent. Major shipbuilders also faced declines, with HD Hyundai Heavy plunging 5.38 percent and Hanwha Ocean plummeting 7.93 percent. Defense giant Hanwha Aerospace retreated 3.54 percent, and power plant manufacturer Doosan Enerbility contracted 2.4 percent.
Shares in the electrical sector also lost ground, but Samsung Electro-Mechanics bucked the trend, shooting up 13.44 percent. Battery shares were among the few winners, with LG Energy Solution surging 15.25 percent on a new deal with a U.S. firm and Samsung SDI jumping 7.3 percent. Internet portal operator Naver climbed 3.12 percent.
The Korean won was quoted at 1,502.8 won against the U.S. dollar, down 1.6 won from the previous session. Bond prices, which move inversely to yields, closed lower, with the yield on three-year Treasurys adding 5.5 basis points and the return on five-year government bonds rising 4.2 basis points.