Seoul shares experienced a significant downturn on Wednesday, plunging by 5.4 percent. This sharp decline in the South Korean stock market was primarily driven by extended losses in key technology stocks as investors critically re-evaluated the future outlook for the artificial intelligence (AI) trade. Amidst this market volatility, the Korean won notably strengthened against the US dollar.
Following an initial open 2.7 percent lower, the benchmark Korea Composite Stock Price Index (KOSPI) continued its downward trajectory throughout the day. The KOSPI ultimately closed down by 409.52 points, marking a substantial 5.4 percent drop, to settle at 7,246.79.
Trading activity was exceptionally heavy, with a total volume of 495.75 million shares exchanging hands, valued at a robust 41.65 trillion won ($27.78 billion). The market breadth was overwhelmingly negative, as declining stocks outnumbered gainers by a significant margin of 763 to 124.
In terms of investor activity, foreign investors recorded net purchases of 335.64 billion won worth of stocks. Conversely, institutional investors were net sellers, divesting a net 337.7 billion won. Additionally, other foreign investor segments contributed to the selling pressure, accounting for a net 45.1 billion won in outflows.
The majority of large-cap stocks in Seoul mirrored the overnight losses seen on Wall Street. The Dow Jones Industrial Average had slipped by 0.25 percent, while the tech-heavy Nasdaq composite index registered a more pronounced decline of 1.16 percent.
Market analysts attributed the prolonged slump in South Korean equities to growing investor concerns. These worries center on the possibility that the increasing capital expenditure and expanding production capacities at major technology companies might require more time to generate the necessary earnings growth to justify their current elevated valuations.
Within the Seoul market, technology stocks were at the forefront of the sharp decline.
Market bellwether Samsung Electronics saw its shares plunge by 6.25 percent, closing at 277,500 won. Similarly, chip manufacturing giant SK Hynix experienced a significant drop of 5.68 percent, with its stock ending at 2,076,000 won.
Beyond the tech sector, top automaker Hyundai Motor declined by 3.55 percent, trading at 462,500 won. Defense industry leader Hanwha Aerospace also shed 7.22 percent, closing at 1,041,000 won.
Despite the widespread declines, a few stocks managed to post gains. Shipping firm HMM rose by 2.3 percent to 20,050 won, and S-Oil, a major refiner, climbed 3.3 percent to 131,600 won.
