Kospi nosedives nearly 6 percent on profit hunting after AI-led rallies

Shares tumbled nearly 6 percent on Friday as investors locked in profits after recent rallies in AI-related stocks. The Korean won gained against the U.S. dollar.

The benchmark Kospi lost 519.09 points, or 5.81 percent, to close at 8,411.21, after falling as low as 8,126.84.

The market rout came after the Kospi rallied 5.42 percent on Thursday and posted a 3.26 percent gain on Wednesday.

The index opened 1.31 percent lower and extended its losses, declining more than 8 percent, prompting the bourse operator to activate a circuit breaker at 12:10 p.m. and halt Kospi trading for 20 minutes.

Overnight on Wall Street, tech heavyweights finished mixed, with Micron Technology jumping 15.7 percent on strong earnings, while Apple dropped 6.1 percent after the company raised prices on many of its products due to expensive memory chips.

Trade volume was heavy at 508.9 million shares worth 51.5 trillion won ($33.5 billion), with decliners sharply outnumbering gainers 777 to 111.

Foreigners and institutions sold a net 4.6 trillion won and 3.8 trillion won worth of shares, respectively, while individuals scooped up a net 8.2 trillion won.

"Investors are worried that too expensive memory chips would raise prices of end-use products and undermine demand for memory chips, and that would discourage tech companies from increasing large-scale AI investment," said Han Ji-young, an analyst from Kiwoom Securities.

Semiconductor shares were the biggest losers.

Samsung Electronics tumbled 5.3 percent to 339,500 won, and SK hynix slumped 8.36 percent to 2.67 million won.

SK Square, the parent of SK hynix, plunged 9.43 percent to 1.72 million won, and Samsung Electro-Mechanics shed 0.2 percent to 1.99 million won.

Financial shares also went south, with major banking group Hana Financial Group sinking 3.77 percent to 109,700 won and Samsung Securities skidding 6.32 percent to 103,800 won.

LIG Defense & Aerospace slid 5.16 percent to 735,000 won after announcing its plans to raise 500 billion won through a capital increase to expand domestic missile production facilities.

The local currency fell 10.7 won from the previous session to trade at 1,532 against the dollar at 3:30 p.m.

Yonhap