South Korean Shares Edge Lower

The benchmark KOSPI edged lower to around 8,380 on Tuesday, extending losses for a third straight session, as renewed volatility in heavyweight semiconductor stocks and caution over the durability of the AI-driven rally weighed on sentiment. Foreign investors dumped a record KRW 7.7 trillion worth of local equities in the previous session, extending heavy outflows from Korean equities and adding pressure to the benchmark despite domestic buying. Domestic data also showed industrial production fell 0.3% in May, while semiconductor output declined 10% due to shipment adjustments and base effects. Decliners included SK Square (-4.0%), LG Energy Solution (-7.9%), Hanwha Aerospace (-4.0%), and SK Hynix (-2.1%). Meanwhile, optimism over the government's KRW 800 trillion semiconductor investment plan, alongside improved global risk appetite following easing Middle East tensions and overnight gains on Wall Street, helped cushion the decline. For June, the KOSPI was down more than 1%.

The benchmark KOSPI edged down 0.20% to close at 8,395 on Monday, extending losses from the previous session, as renewed uncertainty over the fragile US-Iran ceasefire lifted oil prices and dampened global risk sentiment. The United States and Iran exchanged fresh strikes over the weekend, while Iran canceled scheduled technical talks with Washington, reinforcing concerns over the ceasefire and potential disruptions to energy supplies and shipping through the Strait of Hormuz. Meanwhile, investors awaited President Lee Jae Myung's unveiling of large-scale semiconductor and AI investment plans, with Samsung Electronics and SK Group expected to announce major long-term investments aimed at strengthening South Korea's advanced technology sector. Despite the supportive policy backdrop, heavyweight chipmakers came under pressure, with Samsung Electronics and SK hynix falling 3.76% and 1.16%, respectively. Losses were also seen in SK Square (-3.84%), SK Inc (-3.68%), and LG Innotek (-2.47%).

The benchmark KOSPI slipped 5.81% to close at 8,411 on Friday, reversing gains from the previous session, following overnight losses on Wall Street and profit-taking. Investor sentiment weakened after the Nasdaq extended its losing streak as renewed weakness in large-cap technology stocks reignited concerns over AI-related valuations. Markets also remained cautious after US core inflation matched expectations but reached its highest level since October 2023, reinforcing expectations that the Federal Reserve could keep interest rates higher for longer. At the same time, investors locked in profits following the KOSPI's 5.4% surge in the previous session. Technology heavyweights declined, with Samsung Electronics and SK Hynix falling 6.28% and 8.95%, respectively, while SK Square (-9.43%), Hyundai Motor (-4.67%), LG Energy Solution (-6.25%), Hanwha Aerospace (-6.27%), Doosan Enerbility (-8.20%), and HD Hyundai Heavy Industries (-3.09%) also traded sharply lower.