South Korean Shares Slip on AI Valuation Fears

The benchmark KOSPI plunged 5.46% to close at 6,035 on Tuesday, after hitting a more than two-month intraday low of 5,911, as mounting concerns over AI valuations and Chinese competition triggered heavy selling in semiconductor stocks. Samsung Electronics and SK hynix slipped 7.19% and 10.09%, respectively, after reports of technological progress by Chinese rival CXMT and renewed doubts about the sustainability of AI spending. Foreign investors sold a net KRW 4.51 trillion worth of shares, adding to the decline. Additionally, Brent crude prices climbed above $106 per barrel amid escalating Middle East tensions, heightening concerns over imported inflation and the interest-rate outlook. Investors are awaiting September US CPI data for further clues on the Federal Reserve's policy outlook. Other notable decliners included SK Square (-13.01%), Samsung Electro-Mechanics (-8.41%), Hyundai Motor (-1.56%), Doosan Enerbility (-1.82%), Hanwha Aerospace (-2.55%), and LG Electronics (-3.79%).

The benchmark KOSPI slipped 3.65% to close at 6,384 on Monday, approaching its lowest level since August, as technology stocks led the decline amid growing concerns over AI valuations. OpenAI’s lower-than-indicated annualized revenue raised doubts about whether AI demand can justify massive investments in chips and data centers. SK hynix and Samsung Electronics plunged 3.87% and 3.82%, respectively, as foreign investors continued heavy selling. Renewed Houthi attacks on Saudi Arabia's main airport over the weekend also heightened concerns over a broader regional conflict, while the possibility of further US involvement added to geopolitical uncertainty. Furthermore, elevated US Treasury yields and persistent inflation concerns weighed on equities. Other notable decliners included SK Square (-6.00%), Doosan Enerbility (-8.46%), Hanwha Aerospace (-3.37%), HD Hyundai Heavy Industries (-5.34%), LG Electronics (-7.73%), and LS Electric (-5.83%).

The benchmark KOSPI slipped 2.62% to close at 6,626 on Thursday, extending losses for a third straight session as elevated global bond yields and inflation concerns weighed on equities. The US 10-year Treasury yield climbed to 5.35%, its highest level since 2002, while Federal Reserve minutes showed most officials expected another rate increase this year, keeping the outlook for US borrowing costs elevated and weighing particularly on technology stocks. At the same time, rising oil prices added to inflation risks and limited the scope for monetary easing. Losses were seen in Samsung Electronics (-2.42%), SK hynix (-2.44%), SK Square (-8.06%), Hyundai Motor (-3.42%), Hanwha Aerospace (-8.33%), and Doosan Enerbility (-3.11%). Meanwhile, Samsung Electronics estimated a record third-quarter operating profit of KRW 107.4 trillion, up 782.5% year-on-year, on strong AI demand and higher memory chip prices. South Korean markets will be closed on Friday for a national holiday.