Seoul: South Korean stocks plunged more than 8 percent shortly after opening on Monday, leading to a 20-minute trading halt. Investors offloaded tech stocks and other major market shares amid concerns over rising inflation, potentially prompting an interest rate hike. The South Korean won was trading significantly lower against the U.S. dollar, opening at a 17-year low.
According to Yonhap News Agency, the benchmark Korea Composite Stock Price Index (KOSPI) fell nearly 9 percent, dropping 683.13 points, or 8.37 percent, to 7,477.46 by 9:30 a.m. This sharp decline activated a circuit breaker for the KOSPI three minutes into trading, pausing activity for 20 minutes. Additionally, trading in the secondary KOSDAQ market was halted for five minutes.
The downturn was triggered by significant losses in major U.S. indexes last week, exacerbated by the largest daily percentage drop in semiconductor shares since March 2020, and a hotter-than-expected U.S. jobs report for May. These developments intensified fears of a potential hawkish shift in policy by the U.S. Federal Reserve.
The Dow Jones Industrial Average closed 1.35 percent lower on Friday, with the S and P 500 falling 2.64 percent and the tech-heavy Nasdaq composite dropping 4.18 percent. Key U.S. semiconductor stocks also saw substantial declines, with Nvidia dropping 6.2 percent, Broadcom down 7.92 percent, and Micron plummeting 13.25 percent.
In Seoul, major corporations experienced significant losses. Samsung Electronics, the market leader, dropped 8.51 percent, while SK hynix lost 7.29 percent. SK Square, an AI investment firm, fell 9.78 percent, and LG Electronics saw a 12.54 percent decline. Hyundai Motor, a top automaker, retreated 9.71 percent, and SK Group decreased by 10.72 percent.
LG Energy Solution, a leading battery firm, went down 3.62 percent, with smaller rival Samsung SDI dropping 10.21 percent. Samsung Electro-Mechanics and Doosan Enerbility each declined 8.37 percent, while Samsung Life Insurance dipped 12 percent.
Foreign investors sold off 342 billion won in local shares, while retail investors and institutions purchased shares worth 207 billion won and 142 billion won, respectively. Seo Sang-young, an analyst at Mirae Asset Securities, noted the critical nature of this week's financial market, highlighting factors like U.S. inflation data, treasury yields, and debates over AI investment sustainability.
Han Ji-young, a researcher at Kiwoom Securities, projected a "challenging" week for the KOSPI. The upcoming release of the U.S. Consumer Price Index for May, SpaceX's listing, and Oracle's earnings results could impact the market.
The Korean won was trading at 1,554.6 per U.S. dollar at 9:30 a.m., down 15.5 won from the previous session, after opening at 1,555.2 won, its lowest since March 6, 2009, during the global financial crisis.