JAKARTA - The South Korean stock exchange opened with a strong shock on Monday morning. The KOSPI index fell more than 8 percent shortly after trading began. The Korea Exchange also suspended trading for 20 minutes.
According to a Yonhap report quoted on Monday, June 8, the pressure came from selling shares of technology and large-cap stocks. Investors are worried that a return to hot inflation could drive interest rates higher. The Korean won also weakened sharply against the US dollar and briefly opened at a 17-year low.
The KOSPI index (Korea Composite Stock Price Index), the main index of the South Korean Stock Exchange, fell nearly 9 percent. At 09.30, KOSPI fell 683.13 points or 8.37 percent to 7,477.46.
Korea Exchange activated a circuit breaker, a mechanism for temporarily stopping trading when the index falls too sharply, about three minutes after the exchange opened. KOSPI trading was halted for 20 minutes.
For the KOSDAQ market, the exchange also activated the sell-side sidecar, a mechanism for temporarily restricting sell transactions when market pressure surges. The move was made about six minutes after opening, and trading was halted for five minutes.
Pressure in Seoul followed last week's sharp Wall Street weakness. US semiconductor stocks recorded their biggest daily drop since March 2020. A stronger-than-expected May US labor report also triggered market concerns that the Federal Reserve or The Fed, the US central bank, would take a more aggressive stance on interest rates.
On Friday local time, the Dow Jones Industrial Average fell 1.35 percent. The S&P 500 weakened 2.64 percent. The Nasdaq Composite, which is home to many technology stocks, fell 4.18 percent.
Shares of major US chipmakers fell. Nvidia fell 6.2 percent, Broadcom weakened 7.92 percent, and Micron fell 13.25 percent.
In Seoul, Samsung Electronics, the South Korean company with the largest market capitalization, fell 8.51 percent. Its rival in the chip sector, SK hynix, fell 7.29 percent.
Shares of SK Square, an artificial intelligence or AI investment company, fell 9.78 percent. LG Electronics fell 12.54 percent. Hyundai Motor fell 9.71 percent, while SK Group weakened 10.72 percent.
In the battery sector, LG Energy Solution fell 3.62 percent. Samsung SDI fell 10.21 percent. Samsung Electro-Mechanics weakened 8.37 percent, Samsung Life Insurance fell 12 percent, and Doosan Enerbility lost 8.37 percent.
Yonhap reported that foreign investors sold local stocks worth 342 billion won. On the other hand, retail investors bought 207 billion won and institutions absorbed 142 billion won.
"Many things are at stake in the financial market this week, with US inflation data, government bond yields, and ongoing debates about the sustainability of AI-related investments occurring simultaneously," said Seo Sang-young, analyst at Mirae Asset Securities.
Han Ji-young, a researcher at Kiwoom Securities, predicts this week will be difficult for the KOSPI. He said the release of the US Consumer Price Index for May, SpaceX's planned listing, and Oracle's earnings report could weigh on the market.
The Korean won was trading at 1,554.6 won per US dollar at 0930, down 15.5 won from the previous session. Previously, the won opened at 1,555.2 per US dollar, the lowest level since March 6, 2009, when global markets were hit by the financial crisis.
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