Seoul shares plunge over 5 pc on AI regulation concerns after US midterms
South Korean stocks plunged more than 5 per cent on Thursday as the Democratic Party's landslide in the US midterm elections sparked concerns over tighter regulations on artificial intelligence (AI) investments. The local currency fell against the US dollar.
The benchmark Korea Composite Stock Price Index (KOSPI) fell 300 points, or 5.28 percent, to close at 5,383.80.
After opening 1.82 percent lower, the index extended losses in the morning, and the bourse operator activated a sell-side sidecar at 10:16 a.m. to suspend program trading for the KOSPI-listed shares for five minutes, reports Yonhap news agency.
Trade volume was light at 256.8 million shares worth 22.6 trillion won (US$16.8 billion), with losers beating winners 534 to 344.
Foreigners sold a net 3.39 trillion won worth of shares, while institutions and individuals scooped up a net 841.8 billion won and 2.28 trillion won, respectively.
The Democrats' victory, dubbed a "blue wave," raised concerns that the new Congress that takes control in January could tighten regulations on AI data centers, potentially affecting investment in the sector.
"The 'blue wave' hit the KOSPI, dragging down shares within the semiconductor value chains and stoking a foreign sell-off," said Kim Seok-hwan, an analyst at Mirae Asset Securities.
"Democrats gained control of both chambers of Congress, raising concerns over tighter regulations on AI data centres and slower AI investments."
In Seoul, tech giant Samsung Electronics tumbled 7.57 percent to 201,500 won and its chipmaking rival SK hynix plummeted 9.46 percent to 1.26 million won.
Hanmi Semiconductor, a leading chip equipment maker, slumped 9.13 percent to 169,100 won, and Samsung Electro-Mechanics, the electronic component affiliate of Samsung Electronics, dived 15.34 percent to 944,000 won.
With rising hopes for diplomatic solutions for wars in the Middle East and East Europe, refinery and defence shares closed in negative territory. Leading oil refinery SK Innovation sank 7.68 percent to 114,200 won, and defence giant Hanwha Aerospace backtracked 7.48 percent to 680,000 won.
However, top carmaker Hyundai Motor rose 3.53 percent to 293,500 won and its sister Kia increased 5.22 percent to 100,800 won. Leading mobile carrier SK Telecom gained 0.13 percent to 77,500 won, and internet portal operator Naver jumped 8.26 percent to 184,900 won.
The local currency was quoted at 1,342.1 won against the greenback as of 3:30 p.m., down 0.6 won from the close of the previous stock trading session.
Bond prices, which move inversely to yields, closed higher. The yield on three-year Treasurys fell 4.5 basis points to 3.669, and the return on the benchmark five-year government bonds dropped 6.8 basis points to 3.769.
