Kospi declines over 3% on profit-taking due to persistent AI concerns

Shares plunged more than 3 percent on Thursday as investors took profits on major chip shares after a rebound in the previous session, following concerns about investments in the AI value chain. The won strengthened against the dollar.

The benchmark Kospi fell 201.8 points, or 3.52 percent, to 5,533.77.

The index opened down 1.14 percent before briefly turning positive to reach an intraday high of 5,740.28. It soon resumed its decline, with losses deepening sharply.

The Kospi had rebounded more than 3 percent in the previous session, recovering from steep losses as semiconductor shares rallied.

Overnight, U.S. stocks closed mixed, as AI-related shares rebounded following SpaceX’s quarterly results.

The Dow Jones Industrial Average rose 0.69 percent, the S&P 500 gained 0.58 percent and the tech-heavy Nasdaq composite advanced 1.05 percent.

After reporting sound earnings, Meta Platforms boosted its bet on the AI sector.

“Although Meta and Tesla posted earnings that exceeded market expectations, their results failed to ease concerns over profitability following massive AI investments,” Lee Kyoung-min, an analyst at Daishin Securities, said.

“The Kospi’s losses widened, as the end of SK hynix’s share buyback program reduced a source of support for market demand,” he added.

Trade volume was light at 201.17 million shares worth 13.7 trillion won ($10.4 billion), with decliners far outnumbering advancers 706 to 174.

Foreigners and individuals bought a net 6.1 billion won and 38.1 billion won, respectively, while institutions off-loaded a net 46.3 billion won.

Market heavyweights fell across the board, led by a sharp sell-off in technology shares.

Samsung Electronics fell 4.03 percent to close at 214,500 won, and rival chipmaker SK hynix declined 5.49 percent to 1.22 million won.

Samsung Electro-Mechanics, an electronics component affiliate of Samsung Electronics, went down 1.97 percent to 1.15 million won after opening higher on news of its partnership with Nvidia.

The local currency strengthened by 1 won from the previous session to trade at 1,324.2 against the dollar as of 3:30 p.m. 

Bond prices, which move inversely to yields, closed lower. The yield on three-year Treasurys added 1.8 basis points to 3.84, and the return on the benchmark five-year government bonds went up 1.9 points to 3,983.

Yonhap