South Korean Shares Slide on Chip Selloff

The benchmark KOSPI declined nearly 5% to around 8,210 on Friday, extending losses for a second straight session and heading for its steepest weekly drop since late March amid a global semiconductor selloff. Chip stocks came under heavy pressure after disappointing results from Broadcom triggered a broad pullback in semiconductor shares worldwide. Sentiment was further pressured by escalating Middle East tensions after Hezbollah rejected a new ceasefire proposal in Lebanon and Israel signaled it would maintain its military presence, undermining efforts to advance a broader peace agreement involving Iran. This fueled risk aversion and concerns over potential disruptions to energy markets. Investors also continued to lock in profits following the market's recent record-setting rally, while foreign funds remained heavy net sellers. Samsung Electronics (-6.8%) and SK Hynix (-9.0%) led losses, alongside SK Square (-9.2%), Hyundai Motor (-6.6%), and LG Energy Solution (-3.2%).

The benchmark KOSPI fell 1.84% to close at 8,639 on Thursday, retreating from record highs and tracking overnight losses on Wall Street as escalating tensions between the US and Iran weighed on investor sentiment. Iran struck Kuwait International Airport and Israel signaled that it, together with the US, was prepared to launch further strikes against Iran if necessary, driving oil prices higher and raising inflation risks. The decline also reflected profit-taking following the index's extraordinary AI-driven rally, with investors turning cautious amid elevated market volatility and growing concerns about stretched valuations. Technology heavyweights Samsung Electronics (-2.08%) and SK Hynix (-3.22%) both traded lower, alongside Hyundai Motor (-3.84%), LG Energy Solution (-4.07%), LG Electronics (-16.18%), and Kia Corp (-2.55%). Still, losses were limited by chip-sector optimism after Goldman Sachs raised its 12-month KOSPI target to 12,000, citing robust AI-driven earnings growth.

The benchmark KOSPI rose 0.15% to close at a record high of 8,801 on Tuesday, as gains in technology stocks offset profit-taking and broader market caution. Samsung Electronics climbed 3.15%, while SK Square surged 6.13%. Sentiment remained supported by optimism over artificial intelligence demand after Nvidia unveiled a new AI-focused chip and discussed AI memory cooperation with SK Group, reinforcing expectations for sustained strength in South Korea's semiconductor sector. Still, gains were limited by concerns over rising inflation and elevated oil prices. South Korea's annual inflation rate accelerated to 3.1% in May, the highest in more than two years, reinforcing expectations that the Bank of Korea could maintain a hawkish policy stance for longer. Investors also monitored renewed uncertainty surrounding US-Iran negotiations, which kept energy prices elevated and weighed on risk sentiment. South Korean markets will be closed on June 3 for a public holiday.