Seoul:South Korean shares experienced a significant downturn, falling by more than 3 percent on Friday. The decline was driven by a sell-off in semiconductor stocks, amidst ongoing concerns regarding the sustainability of artificial intelligence (AI) investments. The Korean won, meanwhile, strengthened against the U.S. dollar.
According to Yonhap News Agency, the benchmark Korea Composite Stock Price Index (KOSPI) dropped 206.92 points, or 3.48 percent, closing at 5,730.74, after reaching an intraday low of 5,599.42. The trading day began with the KOSPI opening nearly 3 percent lower, and losses continued to extend, leading the Korea Exchange to trigger a sell-side sidecar shortly after 10 a.m. This mechanism is activated when the KOSPI 200 Futures Index declines by 5 percent or more for at least one minute.
The sell-off in Seoul followed overnight losses on Wall Street, where investor sentiment was dampened by concerns over high AI-related valuations. Alphabet, Google's parent company, saw a significant drop of over 12 percent after its third-quarter revenue, which rose by 25 percent year-on-year to $127.58 billion, fell short of market expectations. This raised doubts about returns on large AI investments. The tech-heavy Nasdaq Composite Index and the Philadelphia Semiconductor Index also declined, impacting sentiment toward South Korean chipmakers.
The trade volume was light, with 212.76 million shares worth 19.27 trillion won ($14.44 billion) changing hands. Decliners outnumbered advancers 655 to 232. Foreign investors sold a net 1.62 trillion won, while institutions and individuals purchased a net 742.55 billion won and 620.97 billion won, respectively.
Investor sentiment was further impacted by a series of weaker-than-expected third-quarter earnings reports from major tech firms and chipmakers, leading to a sell-off in AI-related company shares. Kang Jin-hyuk, an analyst at Samsung Securities, highlighted that ongoing concerns about AI-driven growth sustainability added to the negative sentiment.
Most KOSPI heavyweights were in negative territory. Samsung Electronics, the top market cap, fell 3.02 percent to 225,000 won, while chip giant SK hynix dropped 7.08 percent to 1.42 million won. Hyundai Motor, a leading automaker, slipped 3.59 percent to 282,000 won after lowering its annual sales target and investment plans. Kia, its sister company, experienced an 11.73 percent plunge to 95,600 won following weaker-than-expected third-quarter operating profits. Additionally, defense firm Hanwha Aerospace slumped 8.42 percent to 696,000 won due to earnings shortfalls linked to delays in delivering K9 self-propelled howitzers to Poland.
As of 330 p.m., the Korean won was trading at 1,334.3 won against the U.S. dollar, an increase of 5.2 won from the previous session's close.