The Kospi and Kosdaq indices on the South Korean stock market at one point dropped 12% and 13% respectively during morning trading. This prompted the Korea Exchange to activate a trading halt mechanism. Both indices have since pared their losses to around 8%.
This could be the Kospi's lowest session in decades. The country's stock market has seen a sell-off for several consecutive sessions. Key Kospi stocks like SK Hynix and Samsung Electronics fell 5% and 7% respectively.
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Kospi (South Korea) index performance over the past month. Chart: Google Finance |
Kospi (South Korea) index performance over the past month. Chart: Google Finance
"The Kospi's decline may stem from its high concentration on a few single stocks. We believe the fall in stock prices is partly due to profit-taking after a strong rally. This also reflects concerns that the adoption rate of AI data centers is slowing due to much higher energy costs compared to conventional data centers", said Lorraine Tan, director of equity research at Morning Star brokerage, to CNBC.
Last year, the South Korean stock market rose over 75%. This rally extended into early this year, helping the Kospi index repeatedly hit new highs thanks to rising chip stocks amid high demand for memory chips.
Asian stock markets have been declining since the beginning of the week, as the Middle East conflict widens and is likely to persist. In Japan, the Nikkei 225 index is currently down 4,6%. Meanwhile, the Topix has lost over 4%. Australia's S&P/ASX 200 index has fallen nearly 2%.
On the Chinese stock market, the Shanghai Composite is currently down 1,4%, while the Hang Seng Index (Hong Kong) has fallen nearly 3%.
Today, China opens its "Two Sessions", shaping its 15th five-year plan. On 5/3, Chinese Premier Li Qiang is expected to announce the country's economic targets. Recently released data shows China's manufacturing activity declined in February, as businesses paused operations for the Lunar New Year holiday.
In the crude oil market, global oil prices continue to rise. Brent crude is currently up 1% to USD 82,2 a barrel. US WTI crude has risen an additional 0,5% to nearly USD 75. Prices are forecast to continue climbing as the Middle East conflict enters its 5th day and Iran declares it will close the Strait of Hormuz, a vital global oil and gas shipping lane.
Ha Thu (according to CNBC, Reuters)
