Seoul

South Korean stocks closed sharply lower Friday, as renewed concerns over an artificial intelligence (AI) bubble weighed heavily on big-cap tech shares. The local currency fell to the lowest level in seven months against the U.S. dollar on massive foreign stock selling.

The benchmark Korea Composite Stock Price Index (KOSPI) tumbled 151.59 points, or 3.79 percent, to close at 3,853.26.

Trade volume was moderate at 307.95 million shares worth 14.02 trillion won (US$9.5 billion), with decliners outnumbering gainers 718 to 177.

Foreigners sold a net 2.83 trillion won worth of shares, while retail and institutional investors bought a net 2.29 trillion won and 495.46 billion won worth of shares, respectively.

According to the Korea Exchange, offshore investors’ net selling reached its largest level since Feb. 26, 2021, when they offloaded 2.83 trillion won worth of shares.

The index opened lower, tracking overnight losses on Wall Street, and further extended its decline as investors were wary of the valuation of AI-related shares and their aggressive investment plans.

Also affecting the sentiment was the Federal Reserve‘s monetary policy, as expectations for further rate cuts continued to wane.

“The market surrendered its gains from yesterday’s Nvidia earnings surprise. Following recent sharp gains, volatility appears to have persisted,” Han Ji-young, a researcher at Kiwoom Securities, said.

“But there remains ample potential for sentiment to reverse depending on upcoming key economic data and additional AI-related developments,” the analyst added.

Tech shares dipped following a rally in the previous session.

Market bellwether Samsung Electronics fell 5.77 percent to 94,800 won, and chip giant SK hynix plunged 8.76 percent to 521,000 won.

Major battery maker LG Energy Solution lost 3.51 percent to 425,500 won, and LG Chem dipped 5.53 percent to 367,000 won.

Nuclear power plant builder Doosan Enerbility sank 5.92 percent to 73,100 won, and defense giant Hanwha Aerospace shed 5.13 percent to 869,000 won.

Leading shipbuilder HD Hyundai Heavy skidded 4.8 percent to 555,000 won, and its rival Hanwha Ocean lost 4.16 percent to 119,800 won. No. 1 steelmaker POSCO declined 3.42 percent to 310,500 won.

Carmakers finished mixed. Top automaker Hyundai Motor retreated 0.95 percent to 259,500 won, while its sister affiliate Kia rose 0.53 percent to 114,000 won.

Leading financial group KB Financial decreased 0.58 percent to 120,500 won, while internet portal operator Naver surged 2.14 percent to 262,500 won.

The local currency was quoted at 1,475.6 won against the greenback at 3:30 p.m., down 7.7 won from the previous session.

It marked the weakest level since April 9, when it finished at 1,484.1 won. The April 9 figure was the lowest since March 12, 2009, when the won closed at 1,496.5 amid the global financial crisis.

Bond prices, which move inversely to yields, ended higher. The yield on three-year Treasurys fell 3.6 basis points to 2.872 percent, and the return on the benchmark five-year government bonds lost 3.9 basis points to 3.076 percent.

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The short-range weapon is believed to have flown 700km (435 miles) and landed in the East Sea, otherwise known as the Sea of Japan.

North Korea has fired at least one ballistic missile towards its eastern waters, the South Korean military has said, just days after United States Defense Secretary Pete Hegseth visited South Korea for annual security talks.

South Korea’s Joint Chiefs of Staff confirmed the development on Friday, saying the short-range missile flew 700km (435 miles) towards the East Sea, otherwise known as the Sea of Japan.

The Japanese government also said North Korea had launched a missile, adding that it is likely to have fallen in waters outside of Japan’s exclusive economic zone.

Pyongyang’s latest launch comes four days after South Korea said its neighbour had fired 10 rounds of artillery into its western waters, and about a week after US President Donald Trump gave Seoul permission to build a nuclear-powered submarine.

Experts say the move, which will see South Korea join a small club of countries using such vessels, will greatly enhance its naval and defence capabilities.

South Korea wants to receive enriched uranium from the US to use as fuel for the nuclear-powered submarine, which it plans to build at home, a South Korean presidential official said on Friday.

Since they both took office earlier this year, Trump and his South Korean counterpart Lee Jae Myung have sought to restart dialogue with North Korean leader Kim Jong Un.

However, Kim has shunned any talks with Washington and Seoul since previous discussions with the US collapsed in 2019.

North Korea’s leader said in September that he was open to talks provided that the US drop its demand for Pyongyang to give up its nuclear weapons. He has repeatedly said his country is an “irreversible” nuclear state.

Last month, Kim attended a major military parade in Pyongyang, along with high-level officials from allied countries, including Russia and China. It showcased some of his nation’s most powerful weapons, including a new intercontinental ballistic missile.

North Korean and Russian military officials met in Pyongyang this week to discuss strengthening cooperation, North Korea’s official Korean Central News Agency (KCNA) said on Friday.

Pak Yong Il, vice director of the Korean People’s Army’s General Political Bureau, met a Russian delegation led by Vice Defence Minister Viktor Goremykin on Wednesday.

KCNA said the allies discussed expanding ties as part of the “deepened bilateral relations” agreed between Kim and Russian President Vladimir Putin.

Earlier this week, South Korea’s spy agency said it had detected possible recruitment and training activities in North Korea, noting this could signal a potential further deployment of troops to Russia.

So far, Seoul estimates that Pyongyang has sent 15,000 soldiers to Russia to aid it in its war against Ukraine, and large numbers have died on the battlefield there.

On Tuesday, the South Korean National Intelligence Service also said it believes that Kim has dispatched about 5,000 military construction troops to its ally since September to help with infrastructure restoration projects.