(LEAD) KOSPI crashes over 8 pct on tech hemorrhage, U.S. rate woes; won rises after verbal intervention

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Multiple Yonhap News Agency reports from Seoul on Monday described a dramatic sell-off in South Korean equities, with the benchmark KOSPI plunging more than 8% in a third consecutive session of losses. The reports, all from Yonhap, consistently noted that the crash was triggered by a combination of renewed worries over artificial intelligence (AI) profitability, concerns about a potential hawkish pivot by the U.S. Federal Reserve, and rising inflation fears.

All six Yonhap dispatches confirmed that a circuit breaker was activated for the KOSPI about three minutes after the market opened, halting trading for 20 minutes, and that a sell-side sidecar was issued for the secondary KOSDAQ market about six minutes after opening, suspending trading for five minutes. Some reports also noted that a circuit breaker was later activated for the KOSDAQ after it fell by more than 8%.

While the headline figure of "more than 8 percent" was consistent across reports, the exact closing or intraday levels varied. Several reports stated the KOSPI plunged 676.18 points, or 8.29%, to close at 7,484.41, after falling as low as 7,442.73. Others, written earlier in the session, cited a plunge of 683.13 points, or 8.37%, to 7,477.46 as of 9:30 a.m. One report from late morning put the drop at 492.8 points, or 6.04%, to 7,667.79 as of 11:20 a.m. These differences reflect the volatile intraday trading and the different reporting times.

Key Claims

According to multiple Yonhap reports, the KOSPI's trade volume was heavy at 448.3 million shares worth 47.8 trillion won (US$31.2 billion), with losers sharply outnumbering winners 873 to 42. Foreigners and institutions dumped local shares worth 355.5 billion won and 1.6 trillion won, respectively, while retail investors scooped up 1.76 trillion won.

The crash followed sharp losses on Wall Street last week. The Dow Jones Industrial Average closed 1.35% lower on Friday, while the S&P 500 dipped 2.64% and the tech-heavy Nasdaq composite slid 4.18%, according to multiple reports. Major U.S. chip shares sharply lost ground, with Nvidia slumping 6.2%, Broadcom contracting 7.92%, and Micron shooting down 13.25%.

In Seoul, market top-cap Samsung Electronics plummeted 8.51%, while its chipmaking rival SK hynix slid 7.29%. AI investment firm SK Square plunged 9.78%, and home appliances maker LG Electronics nosedived 12.54%. Top automaker Hyundai Motor pulled back 9.71%, and SK Group lost 10.72%. Leading battery firm LG Energy Solution went down 3.62%, while its smaller rival Samsung SDI dropped 10.21%. Samsung Electro-Mechanics declined 8.37%, and Samsung Life Insurance dipped, according to reports.

Notably, in later reports, SK Square's plunge was cited as 11.13%, and SK Networks surged 30%, though these figures appeared in only some dispatches.

Perspectives

Analysts attributed the sell-off to multiple factors. "There is a lot at stake in this week's financial market, with U.S. inflation data, treasury yields and the ongoing debate over the sustainability of artificial intelligence-related investment all unfolding simultaneously," said Seo Sang-young, an analyst at Mirae Asset Securities. Han Ji-young, a researcher at Kiwoom Securities, anticipated a "challenging" week for the KOSPI, noting that the release of the U.S. Consumer Price Index for May may weigh on the market.

A report by Samsung Securities suggested the pullback was driven not by weakening market fundamentals but by profit-taking sentiment among investors, mainly targeted at the semiconductor sector, as the market reacted more sensitively to negative developments after an extended rally of chip shares.

One report also noted that Iran and Israel traded strikes, dampening investors' risk appetite, though this was mentioned only in a single dispatch.

The local currency, which opened at a 17-year low against the U.S. dollar, rose during the session in the face of verbal intervention by financial authorities, according to multiple reports. The won's rebound was noted across several dispatches, though the mechanism of the intervention was not detailed.

The KOSPI has been one of the best performing stock indexes across the world in recent months, surging to above the landmark level in previous sessions, which may have contributed to the sharp correction, according to reports.