South Korean Shares Extend Decline

The benchmark KOSPI edged down to around 6,820 on Thursday, extending losses for a fourth straight session, as elevated US Treasury yields continued to weigh on equities. The 10-year Treasury yield rose to 5.3%, approaching its highest level since 2002, while the 30-year yield rose above 5.6%. Samsung Electronics and SK hynix fell modestly, while other decliners included Samsung Electro-Mechanics (-2.3%), KB Financial Group (-1.8%), Shinhan Financial Group (-1.8%), HD Hyundai Heavy Industries (-1.3%), and LG Electronics (-2.1%). Foreign investors’ continued selling of Korean equities added to the downside, with net outflows reaching around KRW21.5 trillion in September. Meanwhile, South Korean exports surged 83.5% year-on-year to a record $120.9 billion in September, led by semiconductor exports that jumped 263% to a record $60.3 billion. At the same time, Micron’s stronger-than-expected results and guidance further reinforced the underlying demand for AI-related memory products.

The benchmark KOSPI fell 0.48% to close at 6,838 on Wednesday, while posting its biggest quarterly drop since Q1 2020, plunging 19% in Q3 after six consecutive quarters of gains. The decline was driven mainly by the July selloff in major chip stocks amid concerns over high AI-related valuations. Global bond yields climbed to multi-year highs as inflation concerns and expectations for higher interest rates weighed on equities, while elevated oil prices amid ongoing Middle East tensions added to inflation risks and concerns over delayed monetary easing. Foreign investors remained net sellers of Korean equities during the quarter. Additionally, Samsung Electronics and SK hynix have completed around 80% of their combined KRW55 trillion buyback plans, raising the prospect of an earlier end to the purchases and lower KOSPI demand. Losses were seen in Samsung Electronics (-0.92%), Hyundai Motor (-1.29%), KB Financial Group (-2.42%), Shinhan Financial Group (-3.62%), and Kia Corp (-2.67%).

The benchmark KOSPI rose nearly 1% to around 6,930 on Wednesday, snapping a two-day decline as gains in US semiconductor shares lifted Korean chipmakers. The Philadelphia Semiconductor Index rose 1.3% overnight, while Samsung Electronics and SK hynix gained about 0.5% and 2.7%, respectively, reflecting renewed demand for major technology stocks. Other notable performers included SK Square (2.9%), Doosan Enerbility (2.5%), and HD Hyundai Heavy Industries (2.1%). The index was also on track to gain over 1% in September. Meanwhile, elevated US Treasury yields limited the advance, with the 10-year yield near its highest level since 2007 and the 30-year yield at its highest level since 2002, keeping borrowing costs elevated for technology stocks. Additionally, Samsung Electronics and SK hynix could complete their combined KRW 55 trillion buybacks by mid-October, earlier than the previously expected late-November timeline, potentially removing an important source of KOSPI demand.