Seoul:South Korean stocks saw a steep decline of over 5 percent on Thursday, triggered by concerns over potential tighter regulations on artificial intelligence investments following the Democratic Party's significant victory in the U.S. midterm elections. The local currency also depreciated against the U.S. dollar.
According to Yonhap News Agency, the benchmark Korea Composite Stock Price Index (KOSPI) dropped by 300 points, or 5.28 percent, closing at 5,383.80. The index, which opened 1.82 percent lower, continued to fall through the morning, prompting the bourse operator to activate a sell-side sidecar at 1016 a.m., halting program trading for KOSPI-listed shares for five minutes.
Trade volume was notably light, with 256.8 million shares valued at 22.6 trillion won (approximately US$16.8 billion) changing hands. The day ended with 534 losers compared to 344 gainers. Foreign investors sold a net 3.39 trillion won worth of shares, while institutions and individual investors purchased a net 841.8 billion won and 2.28 trillion won, respectively.
The Democrats' win, referred to as a "blue wave," has led to apprehensions that the incoming Congress may impose stricter regulations on AI data centers, potentially impacting investment within the sector. Kim Seok-hwan, an analyst at Mirae Asset Securities, noted that the "blue wave" affected KOSPI, particularly impacting shares within the semiconductor value chains, which led to a foreign sell-off.
Notable companies such as Samsung Electronics and SK hynix experienced significant declines, with Samsung Electronics falling 7.57 percent to 201,500 won and SK hynix dropping 9.46 percent to 1.26 million won. Hanmi Semiconductor and Samsung Electro-Mechanics also saw substantial losses.
Despite the overall downturn, some sectors showed resilience. Hyundai Motor and Kia saw their shares rise, and SK Telecom and Naver registered gains. Meanwhile, the local currency was quoted at 1,342.1 won against the greenback, slightly down from the previous session.