(2nd LD) Seoul stocks slide nearly 4 pct on AI jitters, unrest in France

South Korean stocks experienced a significant decline of nearly 4 percent on Tuesday, driven by concerns over the artificial intelligence (AI) value chain and ongoing protests in France. The Korean won strengthened against the U.S. dollar during the trading session. The KOSPI, a key index, fell 215.27 points, or 3.73 percent, to close at 5,552.74, after reaching a low of 5,493.24.

The index had opened 0.6 percent lower, further eroding investor confidence. The KOSPI had previously risen for two days in a row after a sharp sell-off caused by worries surrounding AI-related investments, with the index losing around 21 percent over seven trading sessions from October 6 to Thursday. Despite the recent rebound, concerns over the credit risks and profitability linked to AI investments have not been fully addressed, dampening the sustainability of the recovery, according to Lee Kyoung-min, an analyst at Daishin Securities.

Profit-taking following the previous session's gains led to a return to negative territory. The trading volume was relatively light, with 259.75 million shares traded, totaling 16 trillion won ($12.97 billion), with more shares declining (771) than advancing (117). Notably, foreign investors and institutions sold a combined net of 535.4 billion won and 1 trillion won, whereas domestic investors bought a net of 900 billion won.

Major market players saw their shares plummet, with Samsung Electronics falling 2.98 percent to close at 211,500 won and SK hynix declining 4.23 percent to 1.22 million won, marking its lowest close since April. SK Square, the parent company of SK hynix, dropped 5 percent to 741,000 won, while Samsung Electro-Mechanics, a subsidiary of Samsung Electronics, fell 1.28 percent to 1.16 million won.

The Korean won appreciated to 1,328.1 won against the U.S. dollar by 3:30 p.m., up 2.2 won from the previous session's close. Bond prices, which inversely correlate with yields, saw an increase. The yield on three-year Treasurys dropped 3.7 basis points to 3.840 percent, while the return on benchmark five-year government bonds decreased by 2.4 points to 3,990.