South Korean Stock Market Plunges as Tech Selloff Triggers Worst Weekly Performance Since March

South Korea's stock market experienced a significant decline on Friday, marking its worst weekly performance since late March. A global pullback in technology shares and a stalemate in U.S.-Iran peace talks severely dampened investor risk appetite. The South Korean won fell to its lowest level against the U.S. dollar since 2009, while bond yields surged, prompting verbal warnings from government officials, including Finance Minister Choo Kyung-ho, against speculative one-way bets.

On Wall Street, Broadcom's share price plummeted over 12%, dragging down semiconductor stocks in other regions. The chipmaker's earnings disappointed investors who had bet on a surge in demand for its custom artificial intelligence chips. The Philadelphia Semiconductor Index dropped 2.2%.

The benchmark KOSPI index closed down 478.82 points, or 5.54%, at 8,160.59, recording its largest single-day percentage drop since May 15. For the week, the index fell 3.7%. During the session, the KOSPI dropped as much as 6.96%, triggering a "sidecar" circuit breaker that temporarily halted trading.

Chipmaker Samsung Electronics Co Ltd fell 6.4%, while peer SK Hynix Inc dropped 9.9%. These two chipmakers have recently been rewriting rankings in global stock markets, having driven the KOSPI index up more than 200% over the past year.

The immense influence of these companies within the 5.01 trillion dollar stock market has excited investors but also raised concerns about the risks of an overheated market.

Hyundai Motor Co finished flat, while its affiliate Kia Corp fell 1.95%. Steelmaker POSCO Holdings Inc declined 2.99%, and pharmaceutical firm Samsung Biologics Co Ltd dropped 0.74%.

Foreign investors were net sellers of stocks worth 3.5 trillion won (approximately $2.27 billion). Among all 923 traded stocks, 225 advanced while 672 declined.

Michael Loh of JPMorgan Chase & Co. noted in a report, "Funds that were previously overweight on South Korean stocks may now be facing concentration limits. We understand that individual stock concentration limits could also be a factor prompting investor selling."

The South Korean won has depreciated nearly 7% against the U.S. dollar year-to-date. It closed at 1,539.1 won per dollar, down 0.46% for the day, after hitting an intraday low of 1,549.1 won, its weakest level since March 2009.