(2nd LD) Seoul stocks dip over 3 pct on Mideast uncertainties, AI warnings

Seoul stocks suffered a 3.26 percent decline on Monday, with investors reacting to ongoing geopolitical uncertainties and concerns about the rapid pace of artificial intelligence development. The Korea Composite Stock Price Index (KOSPI) closed at 6,684.37 points, down 225.54 points from the opening bell. Retail investors, who typically have a more speculative approach, were net buyers, purchasing 2.97 trillion won worth of shares, while institutional and foreign investors offloaded a combined net 4.46 trillion won.

The main driver behind the sell-off was the controversy surrounding the speed of AI development, according to Lee Kyoung-min, an analyst from Daishin Securities. Additionally, the postponement of a meeting aimed at reopening the Hormuz Strait contributed to the sharp decline, with Brent crude oil prices hovering above US$108 per barrel.

Notable among the losers were Samsung Electronics, SK hynix, and LG Energy Solution, while Hyundai Motor and defense firm Hanwha Aerospace managed to stay lower. Financial stocks, on the other hand, managed to strengthen as investors anticipated that central banks in South Korea and the U.S. would maintain a tightening monetary stance for a longer period.

The Korean won weakened against the U.S. dollar, closing at 1,347.3 won, a 1.4 won decline from the previous session. Bond prices, which move inversely to yields, also fell, with the yield on three-year Treasurys rising by 1.1 basis points to 4.025 percent, and the return on five-year government bonds increasing by 1.2 basis points to 4.279 percent.