The Wall Street overnight selloff from fears that the U.S. midterm election results could lead to tighter regulation of artificial intelligence (AI) data centers weighed heavily over South Korean memory chips.
The benchmark KOSPI recovered above 5,000 by 9:45 a.m. after falling to 4,923.47, down 8.55 percent from Thursday's close of 5,383.80 earlier in the session, extending Thursday's 5.28 percent plunge.
The Korea Exchange activated a first-stage circuit breaker at around 9:03 a.m. after the index fell at least 8 percent from the previous close for a minute. The measure suspends stock trading and related futures and options trading for 20 minutes.
Foreign investors led the early selling, unloading a net 133.7 billion won ($99.6 million) of KOSPI shares. Institutions bought a net 86.5 billion won, while retail investors purchased 42.6 billion won. Decliners overwhelmed advancers 827 to 34.
The latest rout followed Thursday's sharp decline, when the KOSPI lost 300 points to finish at 5,383.80 as foreign investors sold more than 3.4 trillion won of shares. The selling was concentrated in semiconductor companies.
The pressure was especially severe among South Korea's two largest chipmakers.
Samsung Electronics, the world's leading memory chipmaker, plunged 9.98 percent to 181,400 won while SK hynix, a major supplier of high-bandwidth memory (HBM) chips used in AI accelerators, tumbled 11.71 percent to 1,116,000 won.
Both companies extended their steep losses from Thursday, when Samsung fell 7.57 percent and SK hynix dropped 9.46 percent.
The selloff in Seoul followed a sharp divergence on Wall Street after the U.S. midterm elections. U.S. stocks rallied Wednesday as the election results eased political uncertainty and hopes of an end to the Iran war sent oil prices sharply lower. The Dow Jones Industrial Average jumped 3.03 percent, while the Nasdaq Composite gained 1.44 percent.
Semiconductor stocks, however, fell on concerns that tighter regulations could slow AI data center construction and weaken chip demand. The Philadelphia Semiconductor Index dropped 3.13 percent, with Nvidia losing 3.17 percent and memory-chip maker Micron Technology falling 7.00 percent.
The junior KOSDAQ also suffered steep losses, falling 7.02 percent to 630.78 from Thursday's close of 678.41. The index fell to 630.78 as selling spread across smaller technology stocks.
Unlike the KOSPI, foreign investors were net buyers of junior stocks, purchasing 82.3 billion won. Retail investors sold a net 84.5 billion won, while institutions bought 2.5 billion won. Decliners outnumbered advancers 1,571 to 103.
The South Korean won meanwhile weakened to 1,357.9 per U.S. dollar, compared with 1,342.1 the previous day.
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