South Korean Shares Fall on Middle East Risks

The benchmark KOSPI fell more than 3% to around 6,685 on Monday, extending losses for a third straight session amid escalating Middle East tensions. Oil prices climbed above $100 a barrel as a vessel was struck in the Strait of Hormuz and Saudi Arabia shut its East-West crude pipeline following drone attacks, fueling concerns over further supply disruptions and higher energy costs for South Korea. Additionally, renewed concerns over the sustainability of the AI investment cycle weighed on semiconductor shares, with SK hynix falling more than 6% and Samsung Electronics down nearly 4%. SK Group Chairman Chey Tae-won also warned that heavy AI investment could become a bubble if capital and resources fail to generate sufficient returns. Other notable decliners included SK Square (-7.1%), Hyundai Motor (-3.5%), Doosan Enerbility (-3.1%), Kia Corporation (-2.8%), and Hyundai Mobis (-4.2%).

The benchmark KOSPI fell 1.76% to close at 6,910 on Friday, extending losses from the previous session amid surging oil prices and higher US Treasury yields. WTI climbed above $100 per barrel, while Brent topped $107 amid escalating US-Iran tensions, raising concerns over inflation and further disruptions to oil supplies. Additionally, the US 10-year Treasury yield rose to its highest level since October 2023, while rate-hike bets for next week’s Fed meeting strengthened. Samsung Electronics (-3.44%) and SK hynix (-2.21%) led the decline, alongside losses in SK Square (-4.05%), Hyundai Motor (-1.67%), and LG Energy Solution (-1.37%). Separately, the BOK signaled that it will assess the timing and pace of further rate hikes as inflation remains above target, with CPI accelerating to 3.1% in August. Meanwhile, South Korea’s exports surged 83% year-on-year in the first 10 days of September, led by semiconductor shipments that jumped 270% amid robust AI demand.

The benchmark KOSPI fell 0.25% to close at 7,034 on Thursday, reversing gains from the previous session amid surging oil prices and higher US Treasury yields. Brent crude rose above $101 a barrel, its highest level since May, as escalating US-Iran tensions raised concerns over Middle East energy disruptions, adding to inflation concerns and uncertainty over monetary policy. The US 10-year Treasury yield also climbed to its highest level since November 2023, while Wall Street stocks fell for a third straight session, weighing further on Korean shares. Large-cap performance was mixed, with losses in LG Energy Solution (-1.21%), Samsung Biologics (-1.72%), Doosan Enerbility (-1.42%), and HD Hyundai Heavy Industries (-1.19%), while SK hynix edged up 0.16% and Samsung Electronics was flat. Meanwhile, South Korea and France agreed to strengthen cooperation in AI and semiconductors, including joint research and investment, offering some longer-term support for Korea's technology sector.