Kospi slides below 5,000 on US tech losses

South Korean stocks slumped more than 5 percent Friday morning as US technology shares extended overnight losses on concerns over artificial intelligence profitability, with the Korean won weakening sharply against the US dollar.

After opening 2.9 percent lower at 5,013.13, the index slid quickly, breaking below the 5,000 threshold within minutes. The benchmark briefly sank to 4,899.3 within the first half hour of trading, down more than 5 percent.

The sharp drop triggered a sell-side sidecar just six minutes into the session, halting program trading for five minutes. Sidecars are activated when Kospi 200 futures swing more than 5 percent. Friday’s halt came just four days after a sell-side sidecar was triggered on Monday, followed by a buy-side sidecar the next day, highlighting heightened volatility in the local market.

By 11 a.m., the Kospi had rebounded to around 5,050. Foreigners stayed on the sell side with net sales of about 1.8 trillion won ($1.2 billion), while retail investors and institutions bought a combined 17.5 trillion won.

The Korean won weakened sharply, opening onshore trading 3.7 won lower at 1,472.2 before touching a morning high of 1,478.8.

The selloff followed broad overnight declines on Wall Street, where all three major US indices closed lower. The Dow Jones Industrial Average fell 1.2 percent to 48,908.72, while the S&P 500 slid 1.23 percent to 6,798.4. The tech-heavy Nasdaq dropped 1.59 percent to 22,540.59, extending losses from the previous session.

Market sentiment was weighed down by growing concerns that lofty valuations in AI and technology stocks may be vulnerable, amid fears that heavy spending on artificial intelligence could ultimately pressure profit growth at major tech firms.

Selling pressure was also fueled by renewed worries about a cooling labor market after US government data released Wednesday showed job openings in December fell to their lowest level since the COVID-19 pandemic.

Risk aversion spread across asset classes, with spot gold and silver prices plunging, while Bitcoin slipped below the $67,000 level to a 15-month low in global trading. In Korea, the cryptocurrency also fell below the 100 million won mark, down about 14 percent from the previous session.