South Korean shares dive 5% on AI spending concerns; won rises

SAMSUNG BIOLOGICS

06/08/2026 06:24

Updates as of 0345 GMT
KOSPI falls after two-session rally
SK Hynix down 10%, Samsung down almost 7%
Foreigners net sellers of shares worth $1.8 billion
Korean won hits 10-month high
By Sneha  Kumar
Aug 6 (Reuters) - South Korean stocks declined more than 5% to erase much of the gains from the previous two sessions on Thursday, as AI-linked volatility hammered the tech-heavy benchmark, while the won strengthened to a 10-month high.
The benchmark KOSPI .KS11 fell as much as 5.5% and was trading 4.4% lower at 6,313.14 points as of 0430 GMT, giving up most of the roughly 5% gains accumulated over the prior two sessions.
The declines follow sharp overnight losses in U.S.-listed SpaceX SPCX.O and chipmaker Advanced Micro Devices AMD.O that dragged the tech-heavy Nasdaq .IXIC. Investors dumped both stocks as doubts over the sustainability and returns on the relentless AI spending spree flared again. .N
In South Korea, chipmaker Samsung Electronics 005930.KS fell 6.7%, while rival SK Hynix 000660.KS lost 10.3%. The two stocks account for more than half of the KOSPI index.
"After two straight days of sharp gains, some profit-taking was inevitable," said Dilin Wu, a research strategist at Pepperstone in Singapore, but warned that the "deeper issue is structural".
"The National Pension Service absorbed a lot of the forced selling during the July crash, and it's largely run out of capacity to do that again," Wu said, adding that there is no natural counterweight to foreign outflows.
"That's why a routine pullback becomes a 4.8% down day."
Foreigners sold shares worth 2.61 trillion won ($1.84 billion) on the day, extending July outflows worth 9.86 trillion won.
Meanwhile, the world's two largest chipmakers, which are set to hold a combined $263 billion in net cash by year-end, are facing growing investor calls for a greater share of excess cash via dividends or buybacks.
Both chipmakers told Reuters on Wednesday they were exploring ways to enhance shareholder returns.
On the currency front, the won KRW=KFTC appreciated to as much as 1,414.5 against the U.S. dollar, its strongest level since early October 2025, in the wake of last week's intervention by the foreign exchange authorities.
The currency has appreciated about 2% since intervention, with analysts also attributing the strength to repatriation of hefty proceeds from the SK Hynix ADR launch in the U.S.
Separately, South Korea's finance ministry said the likelihood of economic growth reaching the 3% level had increased significantly, after it raised its 2026 growth forecast to 3.0% from 2.0% last month.
Elsewhere on the KOSPI, Hyundai Motor 005380.KS and sister automaker Kia Corp 000270.KS were down 0.99% and up 0.38%, respectively. Steelmaker POSCO Holdings 005490.KS was flat, while drugmaker Samsung BioLogics 207940.KS rose 1.01%.
($1 = 1,420.0000 won)

(Reporting by Sneha Kumar and Roshan Thomas in Bengaluru; Editing by Subhranshu Sahu and Harikrishnan Nair)
((Sneha.Kumar@thomsonreuters.com;Roshan.Thomas@thomsonreuters.com;))