South Korean shares fall as AI concerns, US inflation weigh on sentiment

South Korean shares declined on Wednesday as investors assessed concerns over the outlook for the artificial intelligence (AI) trade, while stronger-than-expected US inflation data reinforced expectations of further interest rate hikes. The won strengthened against the dollar, while government bond yields rose, Reuters reported.

The benchmark KOSPI fell 17.99 points, or 0.34%, to 5,221.14 as of 0041 GMT.

South Korea's stock market, which has significant exposure to technology and semiconductor companies, remains particularly sensitive to concerns over elevated AI valuations and the prospect of higher US interest rates, Reuters reported.


Chipmakers led the losses, with Samsung Electronics declining 0.96% and SK Hynix shedding 1.07%. Among other heavyweight stocks, Hyundai Motor fell 1.27%, while Kia was little changed.

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However, battery manufacturer LG Energy Solution gained 1.51%. POSCO Holdings advanced 1.66%, while drugmaker Samsung BioLogics slipped 0.34%.

US consumer prices rose more than expected in October, keeping the Federal Reserve on track to raise interest rates next month. According to Reuters, the inflation data reinforced expectations of further monetary tightening. Fed Governor Christopher Waller had indicated before the release that he would support a quarter-percentage-point hike at the December 8-9 meeting unless core consumer price inflation came in at 0.3% or higher.

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Market breadth remained positive despite the benchmark index's decline. Of the 899 stocks traded, 599 advanced and 254 declined. Foreign investors, however, were net sellers of South Korean equities worth 92.8 billion won.

In the foreign exchange market, the won strengthened 0.37% to 1,339.5 per dollar on the onshore settlement platform, compared with its previous close of 1,344.5.

The KOSPI has gained 23.89% so far this year, while the won has appreciated 7.5% against the US dollar over the same period. In the bond market, December futures on three-year Treasury bonds fell 0.19 points to 103.64.

The yield on the most actively traded three-year Korean Treasury bond rose 5.9 basis points to 3.685%, while the benchmark 10-year yield increased 4 basis points to 3.891%, reflecting pressure on bond prices amid concerns over the interest rate outlook, Reuters reported.

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