Seoul shares plummet on tech losses, won weakens against dollar

An official moves at a dealing room of Woori Bank in Seoul, Tuesday. Yonhap

Korean stocks closed markedly lower Tuesday, led by chip and other tech shares, as diminishing expectations for a Federal Reserve rate cut and valuation concerns over artificial intelligence (AI)-related stocks dampened investor sentiment. The local currency weakened against the U.S. dollar.

The benchmark Korea Composite Stock Price Index (KOSPI) plunged 135.63 points, or 3.32 percent, to close at 3,953.62.

It marked the first time since Nov. 7 that the index fell below the 4,000 level.

Trade volume was moderate at 317.62 million shares worth 13.98 trillion won ($9.54 billion), with losers beating winners 817 to 83.

The index opened lower, tracking overnight losses on Wall Street, and extended losses further on heavy selling by institutions and offshore investors.

Institutions and foreigners sold a net 676.82 billion won and 550.22 billion won worth of shares, respectively, while retail investors bought a net 1.24 trillion won.

"Institutions are generally reducing their exposure to AI-related stocks, including Nvidia, according to recent data, which is increasing uncertainty around the sector amid spreading concerns of an AI bubble," Han Ji-young, a researcher at Kiwoom Securities, said.

"But the AI growth narrative appears intact, given Amazon's successful $15 billion corporate bond issuance," the analyst added.

Tech shares lost ground following a rally in the previous session.

Market bellwether Samsung Electronics fell 2.78 percent to 97,800 won, and chip giant SK hynix plunged 5.94 percent to 570,000 won.

Major battery maker LG Energy Solution lost 4.32 percent to 443,000 won, and LG Chem dipped 3.48 percent to 388,000 won.

Top automaker Hyundai Motor retreated 2.58 percent to 264,500 won, and its sister Kia went down 2.47 percent to 114,500 won.

Nuclear power plant manufacturer Doosan Enerbility slid 4.31 percent to 75,400 won, and defense giant Hanwha Aerospace dropped 5.92 percent to 921,000 won.

Shipbuilders finished mixed. Leading shipbuilder HD Hyundai Heavy remained unchanged at 603,000 won, while its rival Hanwha Ocean tumbled 2.37 percent to 127,800 won.

The local currency was quoted at 1,465.3 won against the greenback at 3:30 p.m., down 7.3 won from the previous session.

Bond prices, which move inversely to yields, ended higher. The yield on three-year Treasurys fell 4.2 basis points to 2.872 percent, and the return on the benchmark five-year government bonds shed 3.7 basis points to 3.068 percent.