South Korean shares fall nearly 3% as AI concerns hit chipmakers

SEOUL: Round-up of South Korean financial markets:  

South Korean shares slumped nearly 3% on Tuesday as chipmakers dropped on concerns over AI investment, while political instability in France dampened risk appetite across global financial markets.

The benchmark KOSPI was down 170.63 points, or 2.96%, at 5,597.38 as of 0132 GMT, after rebounding for two consecutive sessions from a recent six-month low.

“Although it is confirmed that recent losses in AI chip stocks were excessive in the short term, credit risks of AI investments have not been resolved,” said Seo Sang-young, an analyst at Mirae Asset Securities.

French markets tumbled on Monday, with bonds, Paris-listed stocks and even the euro falling after widespread protests across France underscored difficulties the government faces in reducing its large deficit.

The turmoil in the euro zone’s second-largest economy has also been partly responsible for keeping the European equities stuck within a narrow range over the past month.

“It is difficult to determine the sustainability of the recent rebound amid pressure from Europe’s financial instability and higher bond yields,” Seo said.

South Korean chipmaker Samsung Electronics fell 1.61% on Tuesday, while peer SK Hynix lost 4.62%.

AI infrastructure company Elice Group opened 16% below its IPO price in its market debut, reflecting broader concerns over AI investment.

Among other index heavyweights, battery maker LG Energy Solution slid 2.08%, while Hyundai Motor and sister automaker Kia Corp were down 3.37% and 3.02%, respectively.

Steelmaker POSCO Holdings shed 2.23%, while drugmaker Samsung BioLogics fell 0.63%. Of the total 913 traded issues, only 95 shares advanced, while 803 declined.

Foreigners were net sellers of shares worth 480.0 billion won ($361.41 million).

The won was quoted at 1,327.8 per dollar on the onshore settlement platform, 0.40% higher than its previous close at 1,333.1.

In money and debt markets, December futures on three-year treasury bonds gained 0.01 point to 102.93.

The most liquid three-year Korean treasury bond yield rose 0.2 basis points to 3.882%, while the benchmark 10-year yield rose by 6.6 basis points to 4.220%.