Seoul: South Korean stocks opened significantly lower on Thursday, reflecting an overnight decline in U.S. technology shares and escalating geopolitical tensions between the United States and Iran. The benchmark Korea Composite Stock Price Index (KOSPI) began the day 2.86 percent lower and continued to fall, dropping 288.94 points, or 3.74 percent, to 7,441.88 within the first 15 minutes of trading.
According to Yonhap News Agency, the sharp decline in the KOSPI aligns with the losses experienced by major U.S. indexes, which were led by a massive sell-off in technology stocks. The Dow Jones Industrial Average concluded 1.87 percent lower, the S and P 500 decreased by 1.62 percent, and the Nasdaq composite, known for its tech focus, fell by 1.98 percent. Significant tech companies like Nvidia, Broadcom, Super Micro Computer, and AMD saw substantial declines amid mounting concerns over an AI valuation bubble.
Additionally, market sentiment was dampened by reports of new U.S. military strikes against Iran, coupled with Iran's threats to target any vessel attempting to navigate the Strait of Hormuz. This development has sparked fears of a potential escalation into a full-scale conflict between the two nations.
Seo Sang-young, an analyst at Mirae Asset Securities, noted that while the U.S. Consumer Price Index for May was softer than anticipated, it did not alleviate concerns regarding a possible hawkish policy shift by the U.S. Federal Reserve.
In the South Korean market, major companies experienced significant share price declines. Samsung Electronics, the market's largest company, dropped 3.47 percent, while SK hynix, a rival in chip manufacturing, fell 2.54 percent. SK Square, an AI investment firm, plummeted 7.86 percent, and Samsung Electro-Mechanics decreased by 4.54 percent. SK Group saw a decline of 6.91 percent.
The automotive sector also faced setbacks, with Hyundai Motor and its affiliate Kia experiencing drops of 5.81 percent and 5.13 percent, respectively. Hyundai Mobis, an auto parts manufacturer, fell 4.56 percent. In the battery industry, LG Energy Solution lost 3.76 percent, while Samsung SDI decreased by 5.14 percent.
Other notable declines included a 5.93 percent drop for Doosan Enerbility, a power plant manufacturer, and a 4.91 percent decrease for home appliances maker LG Electronics. The Korean won traded at 1,524.8 against the U.S. dollar at 9:15 a.m., down 0.6 won from the previous session.