Lee Hyo-jin covers the Bank of Korea, the banking industry and broader financial news. Her previous beats include foreign affairs, North Korea and general reporting on Korean society.
KOSPI retreats from near 8,000-mark on foreign sell-off
A stock ticker at Hana Bank headquarters in central Seoul shows the benchmark KOSPI closing at 7,643.15, down 2.29 percent from the previous trading session, Tuesday. Yonhap
By Lee Hyo-jin
Korea's benchmark KOSPI pulled back from the nearly 8,000-point milestone Tuesday as foreign investors turned heavy sellers to lock in profits following the market's recent rally, triggering a sharp reversal.
After rising as high as 7,999.67 shortly after the opening bell, the benchmark index closed at 7,643.15, down 2.29 percent from the previous trading session. The index briefly plunged to the 7,400 level during intraday trading before paring some of its losses in the afternoon.
The decline, which came after the benchmark index surged to an all-time high of 7,822.24 in the previous trading session, came as foreign investors turned heavy sellers following the recent steep rally in semiconductor stocks.
According to the Korea Exchange, foreign investors and institutions offloaded 5.43 trillion won ($3.65 billion) and 798.9 billion won worth of shares, respectively, while retail investors bought 6.09 trillion won, though their buying failed to cushion the market decline.
Leading chip shares also retreated. Samsung Electronics closed at 279,000 won, down 2.28 percent from the previous trading session, while SK hynix fell 2.39 percent to close at 1.835 million won.
Market watchers said the reversal, after briefly approaching the 8,000-mark, reflected growing profit-taking pressure following recent gains.
"There doesn't seem to be major problems from an earnings perspective, but after a sharp short-term rally, investors appear to be taking profits amid uncertainties stemming from geopolitical tensions," said Han Ji-young, an analyst at Kiwoom Securities.
Investors also appeared sensitive to a Facebook post made the previous evening by Kim Yong-beom, presidential chief of staff for policy, calling for the redistribution of gains from the artificial intelligence (AI) industry.
The recent rally has been fueled by sharply upgraded earnings forecasts for major domestic chipmakers, as investors expect supply shortages driven by aggressive AI infrastructure investment by global Big Tech firms to persist.
In the post, Kim argued that part of the excess profits generated during the AI era should be redistributed to the public through a "national dividend" program.
"The fruits of the AI infrastructure era are not the outcome of individual companies alone, but are built on the industrial foundation that the entire nation has accumulated over the past half-century," he wrote.
Bloomberg reported that Kim's remarks may have unsettled investors, as the Korean government increasingly views AI as a national infrastructure rather than simply another technology sector.
Meanwhile, the secondary bourse Kosdaq opened at 1,214.90, up 0.63 percent from the previous session, and closed at 1,179.29, down 2.32 percent.
In the foreign exchange market, the Korean won opened weaker at 1,475 won per dollar, down 2.6 won from the previous session, and closed at 1,489.9 won, down17.5 won.