Stocks

South Korean Stocks Decline on Tech Downturn

Published January 31, 2025

SEOUL, Jan. 31 -- South Korean stocks experienced a significant drop late Friday morning as technology shares faced pressure following the recent disruption caused by the Chinese artificial intelligence (AI) startup, DeepSeek.

The benchmark Korea Composite Stock Price Index (KOSPI) fell by 28.88 points, or 1.14 percent, reaching 2,507.92 as of 11:20 a.m. Notably, the KOSPI remained closed from Monday to Thursday for the Lunar New Year holiday.

Large technology firms saw their shares decline sharply. Market leader Samsung Electronics dropped 2.42 percent, while its competitor in chipmaking, SK hynix, plunged 9.77 percent due to what is being referred to as the 'DeepSeek shock.'

This week, the introduction of cost-effective AI models from DeepSeek in China has shaken global stock markets. Analysts suggest these Chinese AI models could rival those produced by major U.S. technology companies at a lower cost.

In contrast, major U.S. stock indexes saw gains overnight. Investors took the opportunity to buy tech shares that had previously dropped due to the fears surrounding DeepSeek.

Despite the decline among tech giants in Seoul, several information technology and software companies thrived. The internet portal operator Naver surged by 5.88 percent, and Kakao, which runs the leading mobile messenger in the country, soared 8.11 percent. The positive performance of these firms was influenced by the indication that developing advanced AI models may not rely heavily on expensive computational resources, such as AI chips.

Additionally, financial stocks showed strength. Shares of KB Financial rose by 2.36 percent, Shinhan Financial increased by 2.2 percent, and Meritz Financial gained 2.65 percent in value.

At 11:20 a.m., the local currency was trading at 1,454.20 won against the U.S. dollar, reflecting a sharp drop of 22.9 won from the previous session.

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