Seoul:South Korean stocks experienced a significant decline of over 5 percent on Thursday. This downturn was attributed to the Democratic Party's decisive victory in the U.S. midterm elections, which raised concerns about stricter regulations on artificial intelligence (AI) investments. Consequently, the South Korean won also depreciated against the U.S. dollar.
According to Yonhap News Agency, the Korea Composite Stock Price Index (KOSPI) dropped 300 points, or 5.28 percent, to end the day at 5,383.80. The index initially opened 1.82 percent lower and continued to decline throughout the morning. This prompted the bourse operator to activate a sell-side sidecar at 1016 a.m., temporarily pausing program trading for KOSPI-listed shares.
The trade volume was relatively light, with 256.8 million shares valued at 22.6 trillion won (US$16.8 billion) changing hands. The market saw 534 stocks declining compared to 344 that advanced. Foreign investors sold a net 3.39 trillion won worth of shares, while institutional and individual investors purchased a net 841.8 billion won and 2.28 trillion won, respectively.
The Democratic Party's success, referred to as a "blue wave," generated apprehension that the incoming Congress might impose more stringent regulations on AI data centers, potentially hindering investments in this sector. Analyst Kim Seok-hwan from Mirae Asset Securities noted that the "blue wave" adversely affected KOSPI, especially within the semiconductor value chains, leading to a foreign sell-off.
Major tech companies were among those significantly affected, 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 faced declines of 9.13 percent and 15.34 percent, respectively.
In contrast, Hyundai Motor saw a rise of 3.53 percent to 293,500 won, and Kia increased by 5.22 percent to 100,800 won. SK Telecom and Naver, a leading internet portal operator, also recorded gains of 0.13 percent and 8.26 percent, respectively.
The local currency was valued at 1,342.1 won against the U.S. dollar as of 330 p.m., a decrease of 0.6 won from the previous session. Bond prices rose, with the yield on three-year Treasurys decreasing by 4.5 basis points to 3.669, and the yield on five-year government bonds down by 6.8 basis points to 3.769.