SEOUL, Oct 15 (Reuters) - South Korea's benchmark KOSPI stock index closed at a six-month low on Thursday, as a heavy selloff in chipmakers triggered a circuit breaker after sticky US inflation data raised bets of further rate hikes and doubts AI investment boom.
The benchmark KOSPI ended down 454.59 points, or 7.57%, at 5,554.22, marking the lowest close since April 7 and extending its losing streak to a seventh consecutive session, the longest since September 2024.
During the session, the KOSPI fell
as much as 9.29% and triggered a circuit breaker for the first time since July 29, halting trading for 20 minutes. It was the 10th activation of a circuit breaker on the KOSPI this year and the 16th in its history.
Market volatility , which had been stabilising since July on policy measures to curb a boom in leveraged single-stock exchange-traded funds, rebounded to the highest since late August.
"The market is reacting sensitively to whether capital raising will be sustainable and whether massive infrastructure investment will lead to real income, rather than revenue growth itself in AI services," said Seo Sang-young, an analyst at Mirae Asset Securities.
Chipmaker Samsung Electronics fell 9.5% and peer SK Hynix lost 11.1%, after the Philadelphia Semiconductor Index dropped 4.3% overnight as persistent inflation concerns fuelled expectations of further US rate hikes and hammered AI-linked stocks.
The market "is struggling to find a new buyer" after buyback programmes at Samsung and SK Hynix have run their course, said Mixo Das, head of Korea equity strategy at J.P.Morgan in Hong Kong.
"On a six- to 12-month basis, we still think that all of these AI stocks will be substantially higher than where they currently stand," Das said.
Financial authorities held an emergency meeting to review market conditions and vowed a proactive response to ensure market stability and investor protection.
Most other index heavyweights also declined, with battery maker LG Energy Solution down 4.6% and Hyundai Motor down 5.7%. Of the total 917 traded issues, 113 shares advanced, while 789 declined.
Foreigners were net sellers of shares worth 3.6 trillion won ($2.68 billion).
The won was quoted at 1,344.6 per dollar on the onshore settlement platform, 0.17% lower than its previous close at 1,342.3.
The most liquid three-year Korean treasury bond yield fell by 2.4 basis points to 3.861%, while the benchmark 10-year yield fell by 4.9 basis points to 4.196%.
($1 = 1,343.1000 won)
(Reporting by Cynthia Kim and Jihoon Lee; Editing by Rashmi Aich, Subhranshu Sahu and Jochelle Mendonca)
