South Korean shares fall on profit taking; BOK in focus

South Korean shares experienced a decline of over 1% on Thursday due to profit-taking in the chip sector, as investors turned their focus to the Bank of Korea's policy meeting to glean insights into the nation's growth and policy outlook. The KOSPI benchmark index dropped 66.34 points, or 1.16%, to 5,669.32 as of 0126 GMT. The previous day saw a significant rise of 3.3%, marking the biggest single-day increase in six weeks, propelled by a rebound in chipmakers.

Analyst Han Ji-young from Kiwoom Securities noted that the market was subject to volatile trading due to profit-taking following the sharp gains of the prior session. The Bank of Korea maintained its benchmark interest rate without change, after two consecutive quarter-point hikes in July and August. However, strong chip-driven growth and inflation above target rates kept the possibility of further rate hikes open.

Investors were awaiting Bank of Korea Governor Shin Hyun Song's press conference, scheduled for 0210 GMT, for clues on potential future interest rate increases and the outlook for chip-led economic growth. Among the affected heavyweights were Samsung Electronics, which fell 1.34%, and SK Hynix, down 1.93%. Battery maker LG Energy Solution suffered the steepest decline at 3.77%, while Hyundai Motor and Kia Corp each slipped 2.58% and 1.18%, respectively.

Out of the 910 traded issues, 322 shares saw increases, while 528 declined. Foreign investors were net buyers, purchasing shares worth 107.4 billion won ($80.97 million). The South Korean won stood at 1,326.2 per dollar on the offshore settlement platform, a 0.02% decrease from the previous close of 1,326.0. In money and debt markets, futures on three-year treasury bonds rose 0.05 point to 103.19.

The yield for the most liquid three-year Korean treasury bond decreased by 3.3 basis points to 3.799%, while the benchmark 10-year yield slipped by 3.1 basis points to 4.136%.