South Korean shares fall over 5% on AI spending concerns and oil spike

South Korean shares retreated more than 5% on Friday on worries that a moderation in AI spending by mega ‌U.S. technology firms ⁠will ⁠dampen the outlook for heavyweight Asian chipmakers, with oil prices above $100 a barrel also weighing on sentiment.

The benchmark KOSPI was down 386.33 points, or 5.44%, at 6,710.56 as of 0246 GMT, partly erasing gains from the previous three sessions. The decline triggered a "sidecar" trading curb on the KOSPI, temporarily halting programme trading.

The won crept higher to a near 11-week high of 1,463.1 per dollar on the onshore ⁠settlement platform.


Among index heavyweights, chipmaker Samsung Electronics fell 7.22%, while peer SK Hynix lost 6.83%. Battery maker LG Energy Solution slid 5.46%

Overnight, shares ⁠of Google parent Alphabet sank more than 7%, while those of Microsoft, Meta Platforms and Amazon slipped up to 4% as investors worried about payoffs lagging the pace of soaring AI spending.

Chipmakers, in particular South Korea's SK Hynix and Samsung Electronics, and Taiwan's TSMC, have been among the biggest beneficiaries of the AI spending boom, making them vulnerable to any slowdown in outlays.

Brent crude's climb back above $100 a barrel on an escalating Middle ‌East conflict stoked fears of a fresh inflation shock and added to the risk-off mood.

Elsewhere on the KOSPI, Hyundai Motor and sister automaker Kia Corp were down ⁠9.09% and down 8.28%, respectively. Steelmaker POSCO Holdings shed 3.86%, while drugmaker Samsung BioLogics rose 9.79%.

Of the total 916 traded issues271 shares advanced, while 609 declined. Foreigners were net sellers of shares worth 1.63 trillion won ($1.11 billion).

In money and debt markets, September futures on three-year Treasury bonds lost 0.12 point to 102.57.

The most liquid three-year Korean treasury bond yield rose by 5.8 basis points to 3.965%, while the benchmark 10-year yield rose by 5.9 basis points to 4.442%.