Seoul shares drop over 2% as investors cash in on chip gains
South Korean stocks ended more than 2 percent lower on Wednesday, as investors locked in profits from recent artificial intelligence-fueled rallies in semiconductor shares, while uncertainty over fragile U.S.-Iran peace talks added to the cautious mood, Yonhap News Agency reported.
The benchmark Korea Composite Stock Price Index (KOSPI) lost 173.07 points, or 2.04 percent, to close at 8,303.41. The Korean won weakened against the U.S. dollar.
Coverage comparison
Both reports from Yonhap, the South Korean wire service, presented the same set of facts and framing: the decline was attributed to profit-taking in chip stocks and to geopolitical uncertainty. The only difference between the two versions was that one added details on bond yields at the end. Neither report offered alternative explanations for the market decline.
Key claims
The reports said investor attention was split between the domestic earnings outlook and geopolitical developments. Overnight, U.S. stocks closed higher on a continued chip rally, but investors closely watched the peace talks between Washington and Tehran. Iran on Tuesday said it would not meet with top U.S. envoys who had flown to the region following recent hostilities near the Strait of Hormuz, even as indirect talks continued through mediators in Qatar, according to Yonhap.
Chip heavyweights weighed on the broader market despite robust export data released earlier in the day. South Korea's exports reached a record high in June, surpassing the US$100 billion mark for the first time on the back of record semiconductor shipments, Yonhap reported.
Trade volume was heavy at 396.59 million shares worth 67.84 trillion won (US$43.59 billion), with winners outnumbering losers 699 to 191. Foreigners and institutions sold a net 1.7 trillion won and 70.48 billion won, respectively, while individuals bought a net 1.73 trillion won.
"Foreigners extended their net selling after heavy selling in June, continuing to take profits from the recent rally in semiconductor stocks," Han Ji-young, an analyst at Kiwoom Securities, said in the Yonhap report.
Market bellwether Samsung Electronics fell 5.84 percent to 314,500 won, while chip giant SK hynix declined 3.4 percent to 1.56 million won. Power equipment shares gained on expectations of increased infrastructure investment for semiconductor clusters and artificial intelligence data centers, according to the report.
In the version that included bond market details, Yonhap said bond prices closed lower, with yields rising. The yield on three-year Treasurys added 8.8 basis points to 3.791 percent, and the return on the benchmark five-year government bonds rose 10.3 basis points to 4.028 percent.