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Kospi falls for 3rd day amid AI bubble woes; won sharply down

Published: 20 Aug. 2025, 17:18

A screen in Hana Bank's trading room in central Seoul shows the Kospi closing at 3,130.09 points on Aug. 20, down 21.47 points, or 0.68 percent, from the previous trading session. [NEWS1]

Shares closed lower for the third consecutive session Wednesday as big-cap tech shares tracked overnight losses of U.S. tech giants sparked by concerns over a possible bubble in the AI sector. The won was trading sharply lower against the dollar.

The benchmark Kospi dipped 21.47 points, or 0.63 percent, to close at 3,130.09.

Trade volume was moderate at 331.7 million shares worth 11.6 trillion won ($8.3 billion), with losers outnumbering winners 643 to 241.

Retail and foreign investors dumped local shares worth 392.7 billion won and 232.6 billion won, respectively, while institutions purchased 516.3 billion won.

Overnight, the tech-heavy Nasdaq composite closed 1.46 percent lower, and the S&P 500 shed 0.59 percent after OpenAI CEO Sam Altman warned that the AI market may be in a bubble like the dot-com bubble during the late 1990s, which led to a stock market crash in the early 2000s.

AI chip giant Nvidia lost 3.5 percent, AMD shed 5.44 percent and TSMC slipped 3.61 percent.

Investor sentiment was also dampened by heightened caution ahead of the Jackson Hole economic policy symposium, slated for Friday, where U.S. Federal Reserve Chair Jerome Powell will make a speech on his outlook for the economy.

Wall Street had initially been almost certain that Powell will signal a rate cut in September, but concerns have grown that the Fed chief may take a more cautious approach as the latest U.S. producer price data showed sticky inflation.

"Wednesday's slump of the Kospi can be attributed to the concerns over an AI bubble as seen in the U.S. stock market overnight, the selling of tech shares, profit-taking of shipbuilding, nuclear power and defense shares that had led the recent increase of the Korean stock market," Seo Sang-young, an analyst at Mirae Asset Securities, said.

Seo said nuclear power shares lost ground on foreign selling, while defense shares went down on a profit-taking sentiment. Shipbuilding shares showed weakness amid concerns that domestic companies will again face fierce competition against Chinese firms, he added.

In Seoul, chip giant SK hynix slid 2.85 percent to 255,500 won, while its rival Samsung Electronics gained 0.71 percent to 70,500 won.

Leading battery maker LG Energy Solution lost 1.69 percent to 377,500 won, and defense powerhouse Hanwha Aerospace dipped 1.33 percent to 816,000 won.

Nuclear power plant builder Doosan Enerbility shot down 3.53 percent to 57,400 won, and internet portal operator Naver declined 1.77 percent to 221,500 won.

Shipbuilders were mixed, with Hanwha Ocean down 0.75 percent to 105,200 won and HD Korea Shipbuilding slipping 1.55 percent to 349,500 won. HD Hyundai Heavy gained 0.67 percent to 450,500 won.

Automakers were among the few gainers.

Hyundai Motor increased 0.68 percent to 220,500 won, and its sister Kia climbed 1.06 percent to 105,100 won.

The local currency was quoted at 1,398.4 won against the greenback at 3:30 p.m., up 0.55 percent from the previous session's quote of 1,390.7 won.

Bond prices, which move inversely to yields, closed higher. The yield on three-year Treasurys decreased 0.3 basis point to 2.441 percent, while the return on the benchmark five-year government bonds went down 0.2 basis point to 2.611 percent.

Yonhap