South Korean stocks closed 1.8 percent lower on Friday, capping a turbulent week amid concerns over an AI bubble and renewed U.S.-China trade tensions. The Kospi index tumbled to 3,953.76, while the won weakened to a seven-month low against the dollar. Foreigners and institutions sold off shares heavily.
After choppy trading in Seoul on November 7, the Kospi index tumbled 72.69 points, or 1.81 percent, to close at 3,953.76. It touched an intraday low of 3,887.32 and once fell over 3 percent. Trade volume was moderate at 366.7 million shares worth 18.6 trillion won ($12.8 billion), with 677 losers outnumbering 211 winners.
Foreigners and institutions sold shares worth 472.2 billion won and 228.1 billion won, respectively, while retail investors bought 695.9 billion won. This week, the Kospi showed severe volatility, hitting a record high over 4,200 on Monday before plunging nearly 3 percent on Wednesday.
The decline followed overnight losses on Wall Street, driven by fears over stretched AI valuations and a cooling labor market. The Dow Jones Industrial Average fell 0.84 percent, the Nasdaq composite dipped 1.9 percent, and the S&P 500 declined 1.12 percent. Challenger, Gray & Christmas Inc. reported that U.S. companies announced 153,074 job cuts last month, almost triple the year-ago figure.
The afternoon plunge deepened as media reports indicated the White House decided against allowing Nvidia to sell scaled-down AI chips to China, escalating trade tensions. Seo Sang-young, an analyst at Mirae Asset Securities, noted: "In addition, China's exports decreased 1.1 percent in October, marking the first on-year drop since March 2024, fueling concerns South Korea's exports may also decrease."
Big-cap tech shares like Samsung Electronics (-1.31 percent to 97,900 won) and SK hynix (-2.19 percent to 580,000 won) were hit by AI bubble woes, alongside Hyundai Motor (-1.86 percent to 264,000 won) and Kia (-1.7 percent to 110,100 won). Defense stocks such as Hanwha Aerospace (-4.85 percent to 932,000 won) and LIG Nex1 (-16.53 percent to 401,500 won) suffered big losses, but Hanwha Ocean (+3.09 percent to 126,800 won) and Kakao (+3.46 percent to 62,800 won) gained.
The won traded at 1,456.9 to the dollar at 3:30 p.m., down 9.2 won to a seven-month low, breaching the key 1,450 level for the first time since April. Bond prices fell, with the three-year Treasury yield rising 6 basis points to 2.894 percent and the five-year note up 5 basis points to 3.043 percent.
