Seoul: South Korean stocks experienced a sharp decline of nearly 6 percent as investors sought to lock in profits following recent rallies fueled by artificial intelligence (AI)-related stocks. The Korean won appreciated against the U.S. dollar.
According to Yonhap News Agency, the benchmark Korea Composite Stock Price Index (KOSPI) dropped by 519.09 points, or 5.81 percent, closing at 8,411.21, after reaching a low of 8,126.84. This market downturn followed a significant 5.42 percent gain on Thursday and a 3.26 percent rise on Wednesday.
The index opened 1.31 percent lower, with losses deepening to over 8 percent, prompting the bourse operator to implement a circuit breaker at 12:10 p.m., halting KOSPI trading for 20 minutes. On Wall Street, tech giants reported mixed results as Micron Technology surged 15.7 percent on robust earnings, while Apple fell 6.1 percent after raising product prices due to costly memory chips.
The trading volume was substantial, with 508.9 million shares valued at 51.5 trillion won (approximately US$33.5 billion) changing hands. Decliners significantly outnumbered gainers, with 777 stocks falling compared to 111 rising. Foreign investors and institutions sold a net 4.6 trillion won and 3.8 trillion won in shares, respectively, while individual investors bought a net 8.2 trillion won.
Han Ji-young, an analyst from Kiwoom Securities, noted, "Investors are worried that too expensive memory chips would raise prices of end-use products and undermine demand for memory chips, and that would discourage tech companies from increasing large-scale AI investment." Semiconductor shares were the most affected, with Samsung Electronics, the leading memory chipmaker, dropping 5.3 percent to 339,500 won, and SK hynix falling 8.36 percent to 2.67 million won.
SK Square, the parent company of SK hynix, saw a decline of 9.43 percent to 1.72 million won, while Samsung Electro-Mechanics, an affiliate of Samsung Electronics specializing in electronic components manufacturing, fell 0.2 percent to 1.99 million won. Financial shares also declined, with Hana Financial Group sinking 3.77 percent to 109,700 won, and Samsung Securities dropping 6.32 percent to 103,800 won.
In the defense sector, LIG Defense and Aerospace decreased by 5.16 percent to 735,000 won following its announcement of plans to raise 500 billion won through a capital increase to expand domestic missile production facilities. The Korean won stood at 1,532 won per U.S. dollar at 3:30 p.m., an increase of 10.7 won from the previous session.