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Kospi sinks 0.77% as DeepSeek's AI surfaces

Published: 31 Jan. 2025, 18:01

CHO YONG-JUN
[email protected]

A screen in Hana Bank's trading room in central Seoul shows the Kospi closing at 2.517.37 points on Jan. 31, down 19.43 points, or 0.77 percent, from the previous trading session. [NEWS1]

Shares ended lower Friday after a weeklong holiday as tech shares slid sharply in the aftermath of a recent shock from the emergence of Chinese AI startup DeepSeek.

The benchmark Kospi dropped 19.43 points, or 0.77 percent, to close at 2,517.37. The country's main bourse was closed from Monday to Thursday due to the Lunar New Year holiday.

Trade volume was moderate at 443 million shares worth 13.3 trillion won ($9.14 billion), with losers outnumbering winners 560 to 333.

Foreigners dumped 1.2 trillion won worth of local shares, while retail investors and institutions purchased a combined 1.16 trillion won.

"The Kospi saw volatility in its shares related to semiconductors and electronics due to the DeepSeek shock that hit the global stock markets during the Lunar New Year holiday," Daishin Securities analyst Lee Kyoung-min said.

"DeepSeek's AI model, which is cheaper and more efficient than ChatGPT and other AI models from U.S. tech giants, has raised concerns of slowing investments in advanced chips, data centers and electric facilities," he added.

Earlier this week, a cost-efficient AI model from China's DeepSeek rattled global stock markets, with some experts arguing that the Chinese AI model can compete against those from U.S. tech giants at a lower cost.

Major U.S. indexes, however, gained ground overnight as investors moved to buy up tech shares following a slide sparked by DeepSeek and data indicating the world's largest economy is still strong.

In Seoul, Samsung Electronics dipped 2.42 percent to 52,400 won and SK hynix shot down 9.86 percent to 199,200 won.

Samsung Biologics declined 0.55 percent to 1.08 million won and Hanwha Aerospace plunged 2.79 percent to 400,000 won.

But IT and software shares were bullish as the recent DeepSeek shock indicated developing advanced AI models may not require massive computational resources, such as AI-oriented chips.

Naver jumped 6.13 percent to 216,500 won and Kakao soared 7.27 percent to 38,350 won.

Financial shares also gained ground, with KB Financial up 3.15 percent to 91,700 won, Shinhan Financial up 2.2 percent to 51,100 won and Meritz Financial climbing 4.48 percent to 114,200 won.

Samsung C&T also surged 4.26 percent to 119,900 won and Samsung Fire & Marine Insurance shot up 11.71 percent to 381,500 won.

Game publisher Krafton soared 6.12 percent to 364,000 won.

The local currency was trading at 1,452.7 won against the greenback at 3:30 p.m., sharply up 21.4 won from the previous session, the highest since Jan. 17.

Bond prices, which move inversely to yields, closed mixed. Three-year government bond yields rose 0.3 basis points to 2.573 percent, while the return on the benchmark 10-year U.S. government bonds fell by 2.2 basis points to 4.518 percent.

BY CHO YONG-JUN, YONHAP [[email protected]]