Seoul: South Korean stocks experienced significant losses late Friday morning, with investors selling off tech shares to capitalize on the previous session's rally, amid ongoing concerns about investments in artificial intelligence (AI). The benchmark Korea Composite Stock Price Index (KOSPI) opened 1.31 percent lower and continued its downward trajectory, dropping 501.16 points, or 5.61 percent, to 8,429.14 by 11:20 a.m.
According to Yonhap News Agency, the sharp decline prompted the bourse operator to activate a sell-side sidecar for the KOSPI around 11:13 a.m., pausing program trading for five minutes. This measure is implemented when the KOSPI 200 Futures index falls 5 percent or more for at least one minute. The market was heavily impacted by a selling spree from foreign and institutional investors following a 5.42 percent increase the previous day.
Wall Street witnessed volatility as major tech companies ended in negative territory, with ongoing apprehensions about the future of large-scale AI infrastructure investments. Recent data indicated that U.S. consumer prices increased by 4.1 percent in May, significantly higher than the Federal Reserve's 2 percent target, leading to expectations that the central bank may adjust its monetary policy to address inflationary pressures.
In Seoul, semiconductor stocks were hit hard, with Samsung Electronics declining 6.56 percent and its competitor SK hynix falling 7.16 percent. Hanmi Semiconductor, a prominent chip equipment producer, decreased by 4.4 percent, while SK Square, the parent company of SK hynix, plummeted 9.58 percent. Major shipbuilder Hanwha Ocean fell by 4.92 percent, and pharmaceutical leader Celltrion dropped 4.04 percent.
The Korean won was trading at 1,548.75 won against the U.S. dollar at 11:20 a.m., marking a decrease of 6.65 won from the previous session.