Key Takeaways
- South Korea’s KOSPI fell 3.59%, giving back the gains recorded during the previous trading session.
- Samsung Electronics and SK Hynix declined as concerns over AI investment costs weighed on technology stocks.
- Foreign and institutional investors were net sellers, while individual investors bought shares.
- The Korean won strengthened against the US dollar despite the decline in local equities.
South Korean stocks fell on Tuesday, with the KOSPI losing 3.59% to close at 5,648.79. Samsung Electronics and SK Hynix led the losses as investors sold technology shares amid concerns over the money being spent on artificial intelligence. The recent weakness in US tech stocks added to the pressure, particularly as investors weighed whether the returns from AI investment will match the cost of building data centres and expanding computing capacity. Foreign investors and local institutions were also net sellers during the session. The Korean won, meanwhile, strengthened slightly against the US dollar.
Samsung Electronics And SK Hynix Lead South Korean Market Decline
Samsung Electronics fell 4.15% to 219,500 won, while SK Hynix declined 5.03% to 1.398 million won. The Nasdaq Composite fell 1.07%, while the S&P 500 lost 0.51%. The Philadelphia Semiconductor Index, which tracks major chip companies, also dropped 3.4%. Investors were weighing concerns about the returns from AI infrastructure spending alongside weaker results from some global technology companies.
One development drawing attention was Oracle’s plan to raise $20 billion through stock and bond offerings. The company intends to use the funding for AI infrastructure and other corporate needs. The announcement added to questions about how technology companies will pay for data centres, computing capacity and other infrastructure needed to support AI services. Those concerns are relevant to South Korean chipmakers because demand for memory products is closely connected to investment in data centres and AI systems. However, the market decline does not by itself indicate that demand for memory chips has weakened. Instead, investors are also looking at the cost of building AI infrastructure and whether the spending plans of large technology companies can translate into sufficient revenue.
Other major South Korean companies also finished lower. SK Square, which owns a stake in SK Hynix, fell 5.37%, while Samsung Electro-Mechanics lost 7.38%. Internet companies Naver and Kakao declined 3.65% and 3.03%. The decline extended beyond the largest companies. The KOSDAQ index, which includes many smaller technology and growth-focused firms, fell 4.08% to 704.39. The market recorded 656 declining stocks against 220 advancing stocks, showing that selling pressure was spread across a large part of the market.
Foreign Investors Sell Shares As Won Moves Higher Against Dollar
Foreign investors and institutions were both net sellers in South Korea’s main stock market on Tuesday. Foreign investors sold a net 1.5 trillion won worth of shares, while institutional investors recorded net sales of 511.7 billion won. Individual investors moved in the opposite direction, purchasing a net 1.7 trillion won. The selling came after the KOSPI gained 2.24% on Monday. Tuesday’s decline erased that advance and brought the index back below the 5,700 level. The KOSDAQ also ended lower, falling 29.97 points during the session.
The currency market moved differently. The won was quoted at 1,341 against the US dollar at 3:30 p.m. local time, gaining 2.8 won from the previous stock-market session’s close. The currency’s movement offered a contrast to the decline in equities, but it did not prevent investors from reducing their exposure to South Korean shares. A broader decline in global stocks as investors assessed concerns about AI spending, technology earnings and the upcoming US midterm elections. South Korea and Taiwan were among the weaker Asian markets, reflecting the pressure on technology-heavy indexes.
Also Read: Asian Currencies Mixed as Yuan Slides After PBOC Move, Won Rebounds
