A screen at Hana Bank's dealing room in Jung-gu, Seoul, displays the Kospi on Monday. The benchmark index closed down 304.33 points, or 4.46 percent, at 6,516.27, while the Kosdaq fell 42.20 points, or 5.33 percent, to 749.64. [Yonhap]
A screen at Hana Bank's dealing room in Jung-gu, Seoul, displays the Kospi on Monday. The benchmark index closed down 304.33 points, or 4.46 percent, at 6,516.27, while the Kosdaq fell 42.20 points, or 5.33 percent, to 749.64. [Yonhap]

South Korean stocks tumbled Monday as a wave of new ultra-large AI models from Chinese technology companies dampened sentiment toward semiconductor shares, while a military clash between the United States and Iran added a fresh layer of geopolitical risk. Both the Kospi and Kosdaq triggered intraday sell-side sidecar halts as investor confidence froze.

The Kospi closed at 6,516.27, down 304.33 points, or 4.46 percent, from the previous session, according to Korea Exchange. The index opened sharply lower, shedding 177.02 points, or 2.60 percent, to 6,643.58, before extending its losses through the session.

Korea Exchange activated a sell-side sidecar on the Kospi market at 11:21 a.m. Monday after KOSPI 200 futures fell more than 5 percent below the previous session's close for more than one minute, triggering a five-minute suspension of program sell orders. At the time of activation, KOSPI 200 futures stood at 1,040.00, down 56.35 points, or 5.13 percent, from the base price of 1,096.35.

On the Kospi market, foreign investors and retail investors posted net purchases of 516.1 billion won ($348 million) and 349.5 billion won, respectively. Institutional investors were net sellers of 920.3 billion won.

Semiconductor stocks weakened as concerns over China's rapid AI advancement weighed on investor sentiment. Moonshot AI recently unveiled Kimi K3, an ultra-large AI model with about 2.8 trillion parameters, and Alibaba followed with Qwen 3.8, a next-generation model with about 2.4 trillion parameters, reigniting fears of a slowdown in AI infrastructure investment and semiconductor demand.

Kim Tae-hyung, a member of both the Presidential Committee on National AI Strategy and the National Science and Technology Advisory Council, cited data from Artificial Analysis on his Facebook page, saying the launch of Kimi K3 had narrowed the technology gap between China's open-weight models and the leading closed frontier models from the United States to roughly two months. "The emergence of Kimi K3 could be an even greater shock than DeepSeek, which shook the AI industry earlier this year," he said.

Samsung Electronics closed down 11,000 won, or 4.31 percent, at 244,000 won. SK Hynix fell 78,000 won, or 4.23 percent, to close at 1.764 million won.

Among other large-cap stocks, SK Square fell 2.89 percent, Hyundai Motor dropped 6.12 percent, LG Energy Solution lost 4.94 percent, Samsung Electro-Mechanics slipped 0.16 percent, Samsung Biologics declined 3.65 percent, KB Financial Group shed 6.79 percent and Samsung Life Insurance tumbled 8.91 percent.

The Kosdaq closed at 749.64, down 42.20 points, or 5.33 percent, from the previous session.

A sell-side sidecar was also triggered on the Kosdaq market at around 10:52 a.m. Monday. Kosdaq 150 futures fell to 1,285.40, down 84.40 points, or 6.16 percent, from the previous session's close of 1,369.80, meeting the activation threshold.

On the Kosdaq, foreign investors and institutional investors were net sellers of 57.7 billion won and 134.8 billion won, respectively, while retail investors posted net purchases of 190.7 billion won.

Among top Kosdaq-listed stocks by market capitalization, Alteogen fell 2.53 percent, Ecopro BM dropped 7.38 percent, Ecopro lost 8.12 percent, Jusung Engineering declined 10.64 percent, Rainbow Robotics fell 5.54 percent, Wonik IPS tumbled 18.19 percent, Leeno Industrial shed 4.43 percent, Kolon TissueGene slipped 1.45 percent and PSK fell 12.59 percent.

Samchundang Pharmaceutical bucked the trend, surging 29.82 percent to hit the daily upper limit after the company said it had received a Pre-ANDA response letter from the US Food and Drug Administration related to its oral semaglutide product.

Lee Gyeong-min, an analyst at Daishin Securities, said domestic markets were hit by a confluence of semiconductor-related headwinds and the risk of military conflict between the United States and Iran. "Semiconductor stocks weakened again on US markets during last week's Constitution Day holiday, and the release of Moonshot AI's Kimi K3 brought renewed concerns about a slowdown in AI infrastructure investment and chip demand — the market absorbed all the external negatives that had built up during the holiday closure in a single session," he said.

Lee added that rising geopolitical tensions from the US-Iran military clash, combined with inflation fears stemming from higher oil prices, had dampened appetite for risk assets. "However, a positive outlook on the memory chip market remains intact, and the resulting tug-of-war between bargain hunters and profit-takers amplified volatility," he said.


hajun825@heraldcorp.com