Global Market: South Korean shares end flat as chipmakers cut losses on 'mega project' announcement

Round-up of South Korean financial markets:

South Korean shares closed little changed on Monday, as chipmakers cut losses after a highly-anticipated announcement of "mega projects" on AI and data centre announcements.

The benchmark KOSPI ‌closed down 16.56 ⁠points, ⁠or 0.20%, at 8,394.65, after falling as much as 3.37% earlier in the day.

South Korea rolled out sweeping chip and AI mega-projects on Monday, as President Lee Jae Myung pledged to cement overwhelming industry leadership with investments worth more than $576 billion over several years.


Chipmaker Samsung Electronics fell 4.86% and peer SK Hynix lost 1.68%, cutting their early losses of 6.9% and 5.8%, respectively. SK Hynix briefly turned ⁠higher after the ‌investment announcement.

The two South Korean chipmakers opened the session sharply lower after the Philadelphia Semiconductor Index tumbled 5.3% on Friday.

While some ⁠investors remain optimistic about the potential for AI to fuel higher profits, others worry that massive spending to build AI data centers may take too long to pay off.

"Chipmaker stocks have been rallying on a surge in chip prices amid supply shortages, but increasing investments will lead to an increase in supply," said Seo Sang-young, an analyst at Mirae Asset Securities.

"Still, the size of the investments announced today is smaller than earlier expectations ‌of 1,000 trillion won," Seo said.

South Korean exports likely posted their strongest annual growth in nearly five decades in June, as semiconductor shipments broke fresh records, a Reuters ⁠poll showed.

The construction sector surged 10.2% on expectations of surging demand from the investment projects.

Foreigners were net sellers of shares worth 7.7 trillion won ($4.99 billion), marking their biggest daily selloff on record.

The won was quoted at 1,545.2 per dollar on the onshore settlement platform, 0.61% lower than its previous close at 1,535.8.

The most liquid three-year Korean treasury bond yield rose by 0.7 basis points to 3.730%, while the benchmark 10-year yield rose by 3.0 basis points to 4.144%. ($1 = 1,544.5700 won)