South Korean shares reverse gains, KOSPI falls over 1% as US midterm results loom

South Korean shares reversed early gains and fell sharply on Wednesday as investors turned cautious ahead of the results of the US midterm elections, with concerns over potential volatility in global financial markets weighing on sentiment, Reuters reported.

The benchmark KOSPI index declined 77.71 points, or 1.38%, to 5,571.08 as of 0154 GMT, after rising more than 2% earlier in the session. The index had opened higher, tracking overnight gains in US semiconductor stocks, but subsequently surrendered its gains as investors reassessed their exposure to risk assets.

According to Reuters, investors are closely monitoring the US election outcome amid expectations of a potentially strong Democratic showing. Such a result could increase the likelihood of political gridlock in Washington and trigger volatility across asset classes, particularly in the artificial intelligence (AI) trade, which has been a major driver of global equity markets.


Technology stocks, which had initially supported the South Korean market, turned lower. Samsung Electronics fell 1.37%, while rival SK Hynix declined 2.9%, reversing their early gains.

Read more: Chinese yuan hits over two-week low against dollar as PBOC signals caution on appreciation

Losses were also visible across other heavyweight stocks. Battery maker LG Energy Solution dropped 4.14%, while Hyundai Motor slipped 0.9% and Kia Corp fell 3.05%. POSCO Holdings declined 1.5%, while Samsung BioLogics lost 2.48%.

Market breadth remained negative, with 637 stocks declining against 229 advancing among the 908 issues traded. Foreign investors were net sellers, offloading shares worth 1 trillion won ($743.74 million), Reuters reported.

In the currency market, the South Korean won strengthened 0.42% to 1,339.5 per dollar on the onshore settlement platform, compared with its previous close of 1,345.1.

Read more: US midterm elections: Early Democratic wins rattle Wall Street

Meanwhile, South Korean government bond prices gained as yields declined. December futures on three-year Treasury bonds rose 0.14 point to 103.60.

The benchmark three-year Korean Treasury bond yield fell 5.1 basis points to 3.693%, while the 10-year yield declined 5.3 basis points to 3.949%.

Investors are expected to remain focused on movements in US stock futures, bond yields and the dollar as election results emerge, with their implications for global risk appetite likely to influence trading across Asian markets.

(Disclaimer: This story is based on inputs from agencies. These do not represent the views of The Economic Times)