The selloff stood in sharp contrast to gains on Wall Street and in mainland China, as shares related to AI infrastructure came under pressure while other sectors benefited from shifting U.S. policy expectations.
The benchmark KOSPI closed at 5,383.80, down 5.28 percent from Wednesday's close of 5,683.80. The index opened 1.82 percent lower at 5,580.09 and extended its decline through the session, erasing the previous day's modest rebound.
Foreign investors sold a net 3.40 trillion won (US$2.53 billion) of KOSPI shares, while retail investors bought a net 2.28 trillion won and institutions purchased 848.5 billion won, absorbing part of the selling pressure. Decliners outnumbered advancers 537 to 344.
Investors are concerned that tighter rules on data center construction could slow spending by major U.S. technology companies and weaken demand for advanced memory chips and equipment supplied by South Korean manufacturers. The policy changes remain uncertain, but the prospect has added pressure to shares already struggling with doubts over the returns on massive AI spending.
On Wall Street, the Dow Jones Industrial Average surged 3.03 percent overnight, while the S&P 500 rose 1.58 percent and the Nasdaq Composite gained 1.44 percent as investors welcomed the election outcome and a sharp decline in oil prices.
Semiconductor shares moved in the opposite direction. The Philadelphia Semiconductor Index dropped 3.13 percent, reflecting concerns that increased regulatory scrutiny could weigh on AI-related capital spending.
The weakness carried over into Seoul, where semiconductor heavyweights bore the brunt of the selling.
Samsung Electronics fell 6.65 percent to 203,500 won, extending losses as investors reassessed the outlook for memory-chip demand. Its preferred shares dropped 5.65 percent to 162,000 won.
SK hynix, a major supplier of high-bandwidth memory (HBM) chips used in AI accelerators, tumbled 8.52 percent to 1,277,000 won, a steeper decline than its rival.
Selling also hit companies tied to the broader semiconductor supply chain. SK Square, an investment holding company and major shareholder in SK hynix, slid 9.34 percent to 815,000 won, while Samsung Electro-Mechanics, a supplier of electronic components and semiconductor substrates, plunged 13.36 percent to 966,000 won.
LG Energy Solution, a major electric-vehicle battery maker, also fell 2.54 percent to 346,000 won as losses extended beyond technology shares.
The junior KOSDAQ suffered a similarly steep decline, closing at 678.41, down 36.54 points or 5.11 percent. The index fell below the 700 mark as selling spread across smaller technology, battery-materials and robotics stocks.
Retail investors bought a net 172.7 billion won of KOSDAQ shares, while foreign investors sold 73.5 billion won and institutions unloaded 103.1 billion won. Decliners overwhelmed advancers 1,292 to 380.
Among semiconductor equipment makers, Jusung Engineering, which specializes in thin-film deposition systems used in chip production, tumbled 10.59 percent to 149,400 won.
Battery-materials stocks also weakened. EcoPro, a holding company with interests in the rechargeable-battery supply chain, declined 6.50 percent to 71,900 won, while its cathode-materials subsidiary EcoPro BM dropped 7.10 percent to 90,300 won.
Rainbow Robotics, a South Korean developer of collaborative and humanoid robots, lost 3.89 percent to 333,500 won.
Biotechnology shares were mixed. Alteogen, which develops technology to convert intravenous medicines into subcutaneous injections, bucked the broader decline, gaining 3.43 percent to 211,000 won. HLB, a biotechnology group developing cancer treatments, fell 2.99 percent to 32,500 won.
The South Korean won, meanwhile, was little changed at 1,341.1 per U.S. dollar, compared with 1,342.1 the previous day.
Across Asia, markets showed sharply different reactions to the election results.
Japan's Nikkei 225 fell 1.79 percent to 61,077.90, dragged lower by heavyweight technology stocks including chip-testing equipment maker Advantest and investment group SoftBank. The broader Tokyo Stock Price Index (TOPIX), however, rose 1.16 percent to 3,940.39 as gains in other sectors offset technology losses.
Mainland Chinese stocks bucked the regional semiconductor selloff. The Shanghai Composite edged up 0.10 percent to 3,689.91, while the Shenzhen Component gained 1.19 percent to 11,471.09. The technology-focused ChiNext index advanced 0.87 percent to 2,566.80.
Chinese investors favored solar equipment, precious metals and media stocks amid expectations that a Democratic-controlled Congress could adopt a more favorable stance toward renewable energy. A decline in the U.S. dollar and Treasury yields supported precious metals, while interest in AI-generated entertainment lifted media shares.
With uncertainty over U.S. AI policy lingering, investors will be watching for signs of easing foreign selling and greater clarity on regulations that could affect demand for Korean memory chips.
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