Seoul shares in free fall, bourse operator issues circuit breaker for Kospi
Seoul, July 29
South Korea's bourse operator on Wednesday activated a circuit breaker for the benchmark Korea Composite Stock Price Index on an extended sell-off in tech shares.
Trading of KOSPI-listed shares was halted for 20 minutes from 12:31 pm as the KOSPI plunged more than 8 per cent from the previous session's close, reports Yonhap news agency.
The benchmark index came under heavy selling pressure as investors sold off semiconductor shares on skepticism about tech giants' heavy spending on artificial intelligence (AI).
It marked the eighth time this year that the KRX has activated a circuit breaker.
Seoul shares turned lower late on Wednesday as investors dumped tech stocks amid concerns over future artificial intelligence (AI) spending.
The Korea Exchange, the country's bourse operator, activated a sell-side sidecar for the KOSPI following its sharp decline, with program trading in KOSPI-listed shares suspended for five minutes around 10:55 a.m.
On Tuesday, the index plunged 10.84 percent to close at 6,023.66, driven by rising competition from China, which led to a heavy sell-off of AI-related stocks, such as chipmakers.
The extended sell-off comes as investors question whether massive spending on AI will generate returns enough to justify tech firms' elevated valuations.
Overnight, U.S. stocks ended mixed. The Dow Jones Industrial Average gained 1.03 percent, while the tech-heavy Nasdaq composite slipped 0.22 percent.
Individuals sold a net 1.37 trillion won (US$943 million) worth of stocks, while institutions and foreigners bought a net 1.27 trillion won and 91.2 billion won, respectively.
Most shares traded in negative territory. Market bellwether Samsung Electronics plunged 5.45 percent, and SK hynix dived 10.32 percent.
Samsung Electro-Mechanics, an electronic component affiliate of Samsung Electronics, plummeted 9.07 percent, and LG Electronics sank 5.21 percent.
Internet giant Naver fell 3.1 percent, and leading mobile carrier SK Telecom shed 4.99 percent.
Among gainers, tobacco company KT&G rose 2.04 percent and Samyang Foods jumped 7.86 percent.
— IANS
Reader Comments
As an investor, this is scary. The KOSPI circuit breaker being activated eight times this year shows extreme volatility. But on the bright side, our Sensex and Nifty have been relatively stable due to domestic retail participation. Still, global cues matter a lot for us. Need to be cautious.
Interesting how people are suddenly questioning AI spending. Just last quarter everyone was bullish on Nvidia and others. This is classic market overreaction. Samsung and SK hynix falling hard is a big deal for global semiconductor supply chains. India should use this as a chance to attract more chip manufacturing investments while valuations are lower.
Wait, individuals sold 1.37 trillion won while institutions bought? That's retail panic right there. Reminds me of March 2020 in India. Smart money is buying the dip, but regular people are running. Hope our SEBI keeps an eye on such circuit breaker mechanisms - they work well but can also create panic if used too often. 🤔
Samsung Electro-Mechanics down 9% and LG Electronics down 5% - these are household names even in India. The Korean economy is so dependent on a few chaebols, this kind of crash hurts everyone. We should diversify our own markets more and not put all eggs in one basket like they do with semiconductors.
As someone who works in tech, the AI spending skepticism is valid. Many companies are pouring billions into infrastructure without clear ROI. This correction was overdue. Indian IT services might face headwinds if clients in the US and Korea start cutting budgets. Good time to diversify portfolios towards FMCG and pharma. Stay safe, everyone.
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