South Korean stocks plummeted significantly on Thursday, with the Kospi index closing down 6.37% at 6,820.60. The decline was primarily driven by steep losses in technology heavyweights amid escalating tensions in the Middle East, specifically after fresh US strikes on Iran. This geopolitical unrest raised concerns about potential disruptions to regional energy supplies and dampened investor sentiment.
Adding to the market's woes, the Bank of Korea unexpectedly raised its benchmark interest rate by 0.25% to 2.75% to combat inflation, marking the first increase in 3.5 years. This hawkish move, coupled with profit-taking after sharp gains in tech stocks the previous session and persistent concerns about the semiconductor industry, put further pressure on the index. Institutional and foreign investors were net sellers, offloading $1.6 billion and $0.93 billion worth of shares respectively, while retail investors bought $2.47 billion.
Technology stocks bore the brunt of the selloff. Market leader Samsung Electronics plunged 8.77% to 255,000 won, and rival chipmaker SK Hynix tumbled 11.53% to 1,842,000 won. These declines follow broader concerns in the semiconductor sector, with Bloomberg reporting that Meta Platforms Inc.'s plan to sell computing power raised questions about excess AI capacity, leading to a chipmaker selloff. US peers Micron Technology Inc. and Sandisk Corp. also closed more than 10% lower. The Korean won rose against the US dollar, quoted at 1,480.4 won.
