South Korean Shares Edge Lower on AI Concerns

The benchmark KOSPI rose 1.76% to close at 5,768 on Monday, extending gains from the previous session amid institutional buying and bargain hunting in large-cap stocks. Institutions bought a net KRW 574.66 billion worth of shares, offsetting part of the selling by foreign investors and retail traders. Samsung Electronics climbed 1.16%, while SK hynix rose modestly by 0.16%. Other notable gainers included LG Energy Solution (6.70%), Hyundai Motor (4.33%), Samsung Biologics (8.71%), Hanwha Aerospace (1.69%), Kia Corporation (4.90%), KB Financial Group (1.75%), and Doosan Enerbility (2.79%). Meanwhile, concerns over AI valuations and the sustainability of infrastructure spending persisted ahead of major US technology earnings reports this week, with Chinese competition in memory chips adding to concerns over the sector's outlook. Additionally, Middle East tensions and attacks on commercial vessels in the Persian Gulf kept oil-supply disruption risks in focus.

The benchmark KOSPI edged down to around 5,660 on Monday, reversing gains from the previous session, as AI investment concerns weighed on semiconductor stocks amid a US tech sell-off. Samsung Electronics slipped more than 2%, while other notable decliners included SK Square (-2.6%), Samsung Electro-Mechanics (-4.7%), Doosan Enerbility (-1.2%), Shinhan Financial Group (-1.4%), HD Hyundai Heavy Industries (-4.0%), Hana Financial Group (-1.1%), and SK Inc (-2.4%). DeepSeek’s latest AI model revived concerns that more efficient models could require less memory, while growing competition from Chinese chipmakers added to worries over Samsung Electronics and SK hynix. Foreign investors’ heavy net selling of Korean equities last week further highlighted the pressure on the market. Separately, escalating Middle East tensions and attacks on commercial vessels in the Persian Gulf kept oil-supply disruption risks in focus, although oil prices eased early Monday.

The benchmark KOSPI rose 2.05% to close at 5,668 on Friday, recovering part of a seven-session decline that took the index to a six-month closing low, as bargain hunting and improved global risk appetite lifted shares. Samsung Electronics climbed 2.74%, while SK hynix rose 0.79%. Other notable gainers included SK Square (1.96%), Hyundai Motor (5.41%), Hanwha Aerospace (7.77%), Kia Corporation (3.97%), Samsung C&T Corp (6.36%), KB Financial Group (2.23%), and Doosan Enerbility (1.74%). Foreign investors returned to net buying, purchasing KRW 343.5 billion worth of shares. Meanwhile, concerns over AI valuations, Chinese competition in memory chips, and the sustainability of AI spending persisted, although the semiconductor sell-off eased. Additionally, hotter-than-expected US producer inflation reinforced concerns over tighter monetary conditions. Elevated oil prices, driven by escalating Middle East attacks and risks to regional energy supplies, further heightened inflation risks.