Seoul stocks open lower on renewed AI woes, rising oil prices

Lead

Seoul stocks opened lower on Wednesday, as investor sentiment was dampened by a report on OpenAI's weaker-than-expected performance and by rising oil prices, according to Yonhap News Agency. The benchmark Korea Composite Stock Price Index (KOSPI) fell 22.02 points, or 0.33 percent, to 6,619.00 at the opening bell, as reported by Yonhap.

Coverage Comparison

Multiple reports from Yonhap News Agency, South Korea's leading wire service, tracked the market's early movements and the factors behind the decline. While all reports cited concerns over the AI sector and elevated oil prices as key drags, they varied in the level of detail provided. One report, updated later in the morning, noted that the KOSPI had recovered somewhat from its opening drop, trading down 5.93 points, or 0.09 percent, to 6,635.09 within the first 15 minutes. Another report, covering late morning trading, showed the index at 6,635.57, down 5.45 points, or 0.08 percent, indicating choppy trading after the initial slide.

Key Claims

• OpenAI's performance renews AI concerns: All three Yonhap reports stated that a Wall Street Journal story published Tuesday (U.S. time) warned that OpenAI, the maker of ChatGPT, was falling short of revenue and user targets. According to the Journal, citing insiders familiar with the matter, some OpenAI executives are worried the company "might not be able to pay for future computing contracts if revenue doesn't grow fast enough." This renewed concerns about the AI sector, which had been a major driver of recent market gains.

• Rising oil prices weigh on market: Reports noted that Brent crude for June delivery rose 2.8 percent to close at over US$111 per barrel, as hopes for a breakthrough in U.S.-Iran peace talks faded. The higher oil prices added to inflationary pressures and weighed on investor sentiment.

• UAE's exit from OPEC: One report mentioned that the United Arab Emirates (UAE) said it is leaving the Organization of the Petroleum Exporting Countries (OPEC) next month. The report noted that the UAE's exit may not have an imminent impact on oil prices due to the closure of the Hormuz Strait, a key international oil route.

• U.S.-Iran peace talks stalled: The same report indicated that U.S. President Trump is said to be "unhappy" with the latest proposal from Iran to end the war, according to reports. Iran had proposed a mutual reopening of the Hormuz Strait and holding off nuclear conversations. This claim was carried by a single outlet and not independently verified.

Perspectives

Investor sentiment: Reports characterized investors as cautious, with many sitting on the sidelines amid uncertainty over AI valuations and geopolitical tensions. The mixed performance of large-cap shares—with Samsung Electronics and Hyundai Motor falling, while Hanwha Aerospace and HD Hyundai Heavy Industries rose—reflected selective buying in defense and shipbuilding sectors.

AI sector outlook: The Wall Street Journal's report raised questions about the sustainability of AI-driven growth, particularly for companies like OpenAI that rely on heavy computing infrastructure. This has broader implications for tech-heavy markets globally, including South Korea's semiconductor and tech sectors.

Oil market dynamics: Rising oil prices, driven by stalled U.S.-Iran talks and the closure of the Hormuz Strait, are a concern for import-dependent economies like South Korea. The UAE's decision to leave OPEC, while not immediately impactful, adds to uncertainty in the oil market.

Market performance: Despite the lower open, the KOSPI showed resilience, with the index recovering from its initial drop. This suggests that while AI concerns and oil prices are headwinds, other factors, such as defense and shipbuilding gains, are providing support.