Seoul shares down over 6 pc on tech slump
Seoul, June 8
South Korean stocks were trading more than 6 per cent lower late on Monday as investors dumped market heavyweights amid a tech slump sparked by a US chip slide and concerns over a possible hawkish pivot of the US Federal Reserve. The local currency was trading sharply lower against the US dollar after opening at a 17-year low.
After falling nearly 9 percent, the benchmark Korea Composite Stock Price Index (KOSPI) had plunged 492.8 points, or 6.04 percent, to 7,667.79 as of 11:20 am (local time), reports Yonhap news agency.
With the sharp fall, the Korea Exchange (KRX) had activated a circuit breaker for the KOSPI about three minutes after opening, halting trading for 20 minutes, and implemented a consecutive sell-side sidecar at around 9:34 a.m.
The KRX had also issued a sell-side sidecar for the secondary KOSDAQ market about six minutes after opening, suspending trading for five minutes.
The KOSPI's weak performance came as major U.S. indexes suffered sharp losses last week, fuelled by semiconductor shares' biggest daily percentage drop since March 2020 and the hotter-than-expected U.S. jobs report for May, which fuelled fears the Fed may opt for a rate hike later this year.
The Dow Jones Industrial Average closed 1.35 percent lower Friday (local time), while the S&P 500 dipped 2.64 percent and the tech-heavy Nasdaq composite slid 4.18 percent.
Major U.S. chip shares sharply lost ground, with Nvidia slumping 6.2 percent, Broadcom contracting 7.92 percent and Micron shooting down 13.25 percent.
"There is a lot at stake in this week's financial market, with U.S. inflation data, treasury yields and the ongoing debate over the sustainability of artificial intelligence-related investment all unfolding simultaneously," said Seo Sang-young, an analyst at Mirae Asset Securities.
Han Ji-young, a researcher at Kiwoom Securities, also anticipated a "challenging" week for the KOSPI, noting that the release of the U.S. Consumer Price Index for May, the SpaceX listing and Oracle's earnings results planned for this week may weigh on the market.
Tracking the latest U.S. tech slump, Samsung Electronics, the world's largest memory chipmaker and the KOSPI's top cap, plummeted 6.69 percent, while its chipmaking rival SK hynix dropped 3.24 percent.
AI investment firm SK Square plunged 7.87 percent, and home appliances maker LG Electronics nose-dived 9.24 percent.
Top automaker Hyundai Motor pulled back 9.14 percent, and SK Group lost 7.68 percent. Leading battery firm LG Energy Solution went down 5.68 percent, while its smaller rival Samsung SDI slid 10.74 percent.
— IANS
Reader Comments
This is what happens when you put all your eggs in the tech basket. The US chip slump is just the trigger - the underlying issue is over-reliance on AI hype. Hope Korea recovers soon.
Circuit breaker activated within 3 minutes! 😱 That's how fast panic spreads. India should note this - we need robust risk management in our markets too. Stay safe, investors.
Interesting how Samsung and SK hynix both dropped massively despite being different companies. Tech sector is interconnected globally. Our own IT stocks should brace for impact.
Isko hai global recession ke signs? 📉 Fed rate hike fears + tech bubble burst = dangerous combo. Indian investors should stay cautious and avoid FOMO.
The KOSPI dropping 6% is scary, but circuit breakers exist for a reason - they give markets time to breathe. At least Korean exchanges have these safeguards. Some countries don't.
Honestly, this is a wake-up call for retail investors. AI stocks were overhyped everywhere - even in India. Time to focus on fundamentals and not just trends. Warren Buffett style investing 💪
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