Seoul shares experienced a significant drop on Thursday, mainly due to heavy losses in technology stocks, influenced by escalating tensions in the Middle East. The benchmark Korea Composite Stock Price Index (KOSPI) opened 4.45 percent lower and closed at 6,820.60, marking a 6.37 percent decline from the previous session. The Korean won, however, strengthened against the US dollar.
Following the sharp decline, the Korea Exchange activated a sell-side sidecar on the KOSPI for 20 minutes after the index fell over 5 percent. This downturn followed a previous surge of 6.24 percent driven by softer U.S. inflation data that alleviated concerns about imminent Federal Reserve interest rate hikes. Additionally, the Bank of Korea raised its benchmark interest rate by a quarter percentage point to 2.75 percent, the first increase in 3 1/2 years, to combat inflation amidst the heightened tensions in the Middle East.
The market saw profit-taking activities after substantial gains in technology stocks in the previous session, with ongoing worries about the semiconductor industry adding pressure to the index. Notably, institutional and foreign investors sold shares worth 2.37 trillion won and 1.38 trillion won, respectively, while retail investors purchased shares worth 3.66 trillion won. Technology stocks, including Samsung Electronics and SK hynix, led the market decline.
Major companies like Samsung Electronics and SK hynix witnessed significant drops, with Samsung Electronics falling by 8.77 percent to 255,000 won and SK hynix tumbling by 11.53 percent to 1,842,000 won. On the other hand, shipbuilder Hanwha Ocean and beverage firm Hitejinro were among the gainers. The Korean won was quoted at 1,480.4 won against the US dollar, up from 1,484.7 won in the previous session, while bond prices closed higher.
