Seoul shares tumble amid AI bubble fears; won plunges to 7-month low
South Korean stocks closed sharply lower Friday, as renewed concerns over an artificial intelligence (AI) bubble weighed heavily on big-cap tech shares. The local currency fell to the lowest level in seven months against the U.S. dollar on massive foreign stock selling, Yonhap reports.
The benchmark Korea Composite Stock Price Index (KOSPI) tumbled 151.59 points, or 3.79 percent, to close at 3,853.26.
The index opened lower, tracking overnight losses on Wall Street, and further extended its decline as investors were wary of the valuation of AI-related shares and their aggressive investment plans.
Also affecting the sentiment was the Federal Reserve's monetary policy, as expectations for further rate cuts continued to wane.
"The market surrendered its gains from yesterday's Nvidia earnings surprise. Following recent sharp gains, volatility appears to have persisted," Han Ji-young, a researcher at Kiwoom Securities, said.
"But there remains ample potential for sentiment to reverse depending on upcoming key economic data and additional AI-related developments," the analyst added.
The local currency was quoted at 1,475.6 won against the greenback at 3:30 p.m., down 7.7 won from the previous session.
It marked the weakest level since April 9, when it finished at 1,484.1 won. The April 9 figure was the lowest since March 12, 2009, when the won closed at 1,496.5 amid the global financial crisis.
Earlier, Qazinform News Agency reported that Nvidia had surpassed expectations as AI demand drives recorded earnings.