Officials are working in the dealing room of Hana Bank in Seoul on Friday after the KOSPI closed at 3,853.26, down 151.59 points (3.79%) from the previous day. Photo provided by: Yonhap
South Korean stocks closed sharply lower on Friday as fresh concerns about an artificial intelligence (AI) bubble weighed on large tech stocks. The local currency has fallen to a seven-month low against the US dollar due to a massive sale of foreign stocks.
The benchmark Korea Composite Stock Price Index (KOSPI) fell 151.59 points (3.79%) to close at 3,853.26.
Trading volume was moderate at 307.95 million shares, or 14.2 trillion won (US$9.5 billion), with declining issues outnumbering advancing issues, 718 to 177.
Foreigners net-sold stocks worth 2.83 trillion won, while individual investors and institutional investors net-bought stocks worth 2.29 trillion won and 495.46 billion won, respectively.
According to the Korea Exchange, net short sales by offshore investors reached the highest level since February 26, 2021, when they sold 2.83 trillion won worth of stocks.
The index opened lower, tracking Wall Street’s overnight losses, then widened further as investors were wary of the valuations and aggressive investment plans of AI stocks.
The US Federal Reserve’s monetary policy also had an impact on sentiment, as expectations for further interest rate cuts continued to decline.
“The market has given up the gains from Nvidia’s surprise earnings yesterday. Volatility seems to be continuing after the recent surge,” said Han Ji-young, a researcher at Kiwoom Securities.
“However, there is still a good chance that sentiment could reverse depending on key economic indicators and further developments related to AI,” the analyst added.
Tech stocks fell after earlier gains.
Market leader Samsung Electronics fell 5.77% to 94,800 won, and semiconductor giant SK Hynix fell 8.76% to 521,000 won.
Major battery manufacturers LG Energy Solution fell 3.51% to 425,500 won, and LG Chem fell 5.53% to 367,000 won.
Doosan Enable, a nuclear power plant construction company, fell 5.92% to 73,100 won, and defense giant Hanwha Aerospace fell 5.13% to 869,000 won.
Shipbuilding giant HD Hyundai Heavy Industries fell 4.8% to 555,000 won, while rival Hanwha Ocean fell 4.16% to 119,800 won. Posco, the largest steel company, fell 3.42% to 310,500 won.
Automakers have ended the melee. Automobile giant Hyundai Motor Co.’s price fell 0.95% to 259,500 won, while sister group Kia Motors’ price rose 0.53% to 114,000 won.
KB Financial, a major financial group, fell 0.58% to 120,500 won, and Internet portal operator Naver rose 2.14% to 262,500 won.
As of 3:30 p.m., the local currency was trading at 1,475.6 won against the dollar, 7.7 won weaker than the previous transaction.
This was the lowest price since April 9th, when it hit 1,484.1 won. This April 9 figure was the lowest since March 12, 2009, when the won closed at 1,496.5 won during the global financial crisis.
Bond prices ended up rising inversely to yields. The yield on three-year government bonds fell 3.6 basis points to 2.872%, while the return on the benchmark five-year government bond fell 3.9 basis points to 3.076%.
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