Seoul shares fall nearly 6% as chip rout deepens on AI spending skepticism
Key Takeaways
- •The KOSPI fell 360.42 points to close at 5,663.24 after briefly dropping to an intraday low of 5,262.77.
- •The Korea Exchange activated a marketwide circuit breaker at 12:31 p.m., suspending KOSPI trading for 20 minutes.
- •Semiconductor stocks led the decline, with Samsung Electronics down 5.23 percent and SK hynix falling 9.61 percent.
- •Investor concern focused on whether heavy artificial intelligence investments can justify current valuations, while competition from China also weighed on sentiment.
- •The Korean won strengthened to 1,446.7 per US dollar, and bond yields declined as bond prices rose.
Seoul shares plunged by nearly 6 percent Wednesday after an almost 11 percent crash in the previous session, as investors continued to dump semiconductor stocks amid growing skepticism over whether massive spending on artificial intelligence will generate sufficient returns.
The local currency strengthened against the US dollar.
The benchmark Korea Composite Stock Price Index lost 360.42 points, or 5.98 percent, to close at 5,663.24, after sinking to an intraday low of 5,262.77.
After opening 1.09 percent higher, the KOSPI reversed course and tumbled by as much as nearly 12 percent in afternoon trading.
At 12:31 p.m., the Korea Exchange activated a marketwide circuit breaker, suspending trading in KOSPI-listed stocks for 20 minutes.
The sharp slide underscored how quickly sentiment has turned against the market’s most crowded semiconductor names, which have been major beneficiaries of the global AI buildout but are now facing a broader reassessment of valuations and spending plans.
The broad sell-off came amid rising doubts over whether heavy AI-related investments by major technology companies could produce enough returns to support their lofty market valuations.
"Rising competition from China following the successful listing of ChangXin Memory Technologies also weighed on investor sentiment," Na Jeong-hwan, an analyst at NH Investment & Securities Co., said.
Trading was heavy, with volume reaching 449.29 million shares worth 47.83 trillion won ($33 billion). Losers outnumbered gainers 804 to 91.
Foreign investors and individuals sold a net 1.23 trillion won and 1.97 trillion won worth of stocks, respectively. Institutions bought a net 3.16 trillion won.
Tech shares led the decline in Seoul.
Market bellwether Samsung Electronics fell 5.23 percent to 208,500 won, and SK hynix plunged 9.61 percent to 1.4 million won.
Top automaker Hyundai Motor dropped 2.88 percent to 353,500 won, while its affiliate Kia fell 1.15 percent to 120,400 won.
Internet giant Naver slipped 4.05 percent to 201,500 won, and energy firm Doosan Enerbility declined 6.03 percent to 60,800 won.
Among gainers, shipping company HMM rose 1.25 percent to 20,250 won, and leading auto parts maker Hyundai Mobis climbed 1.14 percent to 445,000 won.
The Korean won was quoted at 1,446.7 won against the US dollar at 3:30 p.m., compared with 1,462.5 won a day earlier.
Bond prices, which move inversely to yields, closed higher. The yield on three-year Treasurys fell 2.9 basis points to 3.800 percent, while the return on the benchmark five-year government bonds dropped 3.1 basis points to 4.037 percent. (Yonhap)