South Korea’s benchmark Kospi index fell, as rising bond yields threaten the world’s hottest stock rally driven by artificial intelligence.
The Kospi tumbled as much as 4.7% on Monday shortly after the opening bell, extending its drop to more than 10% from the May 14 peak and briefly entering correction territory. The Korea Exchange briefly halted Kospi program selling on Monday after a sharp futures slump. The benchmark has since clawed back some of those early losses and is down about 3%.
The latest swings highlighted once again the fragility of the world-beating stock rally. The intraday gyration of 5% or more has increasingly become more common in the South Korean stock market as the torrid surge took the index to jump from 7,000 to 8,000 in just seven sessions.
The latest decline is “a natural pullback” following the index’s sharp rally over the past month, said Ha SeokKeun, chief investment officer at Eugene Asset Management.
“The immediate triggers were rising interest rates and Samsung Electronics’ labor strike,” Ha said. “However, we do not see this as the beginning of a structural downtrend, but rather a healthy price correction. In fact, we believe attractive buying opportunities in high-quality stocks are emerging again.”
Samsung Electronics Co. and its largest labor union are set to resume negotiations Monday to avert a strike that the nation’s prime minister warned could wreak havoc on the economy.
Management and the union representatives at the world’s biggest memory chipmaker will meet for the talks on wages and compensation, with Samsung having reported operating profit that soared on artificial intelligence-driven demand for its semiconductors.
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