South Korean shares plunged nearly 3 percent on Wednesday, mirroring an overnight Wall Street slump driven by artificial intelligence bubble concerns. The benchmark KOSPI closed at 4,004.42, while the won slid to 1,449.4 against the dollar, its lowest in seven months. Tech-heavy selling dominated the market.
South Korean shares plunged nearly 3 percent on November 5, driven by a slide in big-cap tech stocks that echoed an overnight Wall Street downturn fueled by artificial intelligence (AI) bubble worries. The benchmark Korea Composite Stock Price Index (KOSPI) lost 117.32 points, or 2.85 percent, closing at 4,004.42 after dipping as low as 3,867.81 during the session, retreating below the 4,200 mark just two days after breaching it. The tech-heavy KOSDAQ fell 16.54 points, or 2.84 percent, to end at 565.4.
The sharp decline triggered a sidecar intervention at 9:46 a.m. for KOSPI 200 futures, halting program sell orders for five minutes after a more than 5 percent drop lasting over a minute. A similar measure for KOSDAQ program selling followed at 10:26 a.m. This was the first such sidecar for KOSPI selling since April 7 and for KOSDAQ since August 5 of the previous year. Trading volume was robust at 583.5 million shares worth 28.5 trillion won ($19.7 billion), though losers outnumbered winners 730 to 173.
Foreigners and institutions offloaded shares worth 2.5 trillion won and 79.3 billion won, respectively, countering retail investors' net buying of 2.57 billion won. In a report, Samsung Securities noted, "AI-related tech shares have driven the recent rally in the stock market, but investors are increasingly questioning when companies' massive AI investments will start generating tangible profits." It added, "Remarks from global investment bank CEOs about a possible overvaluation of AI stocks sparked a wave of profit-taking, particularly in the tech sector."
Overnight, U.S. indexes declined: the Dow Jones Industrial Average fell 0.53 percent, the Nasdaq Composite shed 2.04 percent, and the S&P 500 dropped 1.17 percent. AI chip leader Nvidia tumbled 3.96 percent, Micron slid 7.1 percent, Intel lost 6.25 percent, and Palantir plunged 7.94 percent. In Seoul, major stocks reversed gains: Samsung Electronics sank 4.1 percent to 100,600 won, SK hynix dipped 1.19 percent to 579,000 won, Hyundai Motor pulled back 2.72 percent to 268,500 won, Hanwha Aerospace contracted 5.94 percent to 950,000 won, and shipbuilders like HD Hyundai Heavy fell 6.88 percent to 528,000 won. Naver bucked the trend, rising 4.31 percent to 278,500 won.
The Korean won weakened to 1,449.4 against the U.S. dollar by 3:30 p.m., down 11.5 won and marking its lowest level since early April. Bond yields rose inversely: the three-year Treasury yield increased 3.8 basis points to 2.767 percent, and the five-year note added 3.9 basis points to 2.918 percent. Earlier, at 11:20 a.m., the KOSPI was down 4.43 percent at 3,939.1, with the won at 1,448.3.
