(LEAD) Seoul stocks dip over 3 pct on Mideast uncertainties, AI warnings

Seoul stocks experienced a significant decline of over 3 percent on Monday, driven by geopolitical uncertainties and warnings from U.S. tech executives regarding the rapid pace of artificial intelligence (AI) development. The Korean won weakened against the U.S. dollar. Following a sharp opening, the Korea Composite Stock Price Index (KOSPI) closed down 225.54 points, or 3.26 percent, at 6,684.37.

The total trade volume was relatively low at 274.4 million shares worth 20.19 trillion won (US$14.93 billion). More losers than winners emerged, with 561 stocks falling compared to 308 that gained. Retail investors were net buyers, purchasing 2.97 trillion won, while institutional and foreign investors collectively offloaded a net 4.46 trillion won.

The primary catalyst behind the sharp decline was the controversy surrounding the speed of AI development, according to Lee Kyoung-min, an analyst at Daishin Securities. Additionally, the anticipated meeting aimed at reopening transit through the Hormuz Strait was postponed, causing Brent crude, the global oil benchmark, to surpass US$108 per barrel and further dampening investor confidence.

Over the weekend, AI industry leaders, including Dario Amodei, co-founder of Anthropic, called for a slowdown in AI advancement to ensure public safety, following a rare display of unity from tech executives across the United States.

Among the major companies affected, Samsung Electronics plummeted by 4.05 percent to 249,000 won, while SK hynix declined by 6.35 percent to 1,697,000 won. Battery manufacturer LG Energy Solution dropped by 2.36 percent to 351,500 won, and automobile manufacturer Hyundai Motor fell by 2.88 percent to 371,500 won. Defense contractor Hanwha Aerospace, on the other hand, increased by 5.18 percent to 1,137,000 won.

Financial institutions, anticipating a prolonged period of monetary tightening by South Korean and U.S. central banks, saw gains; KB Financial rose by 2.08 percent to 181,600 won, and Shinhan Holdings increased by 1.51 percent to 114,600 won. The Korean won traded at 1,347.3 won against the U.S. dollar, marking a 1.4-won decrease from the previous trading session.