November 15, 2024

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A screen in the dealing room of Hana Bank in Seoul shows the benchmark Korea Composite Stock Price Index sinking 65.49 points, or 2.64 percent to close at 2,417.06 on Wednesday. (Yonhap)

Shares of South Korean tech behemoth Samsung Electronics sank to an over four-year low of under 51,000 won ($36.24) Wednesday, reflecting the clouds cast over the company's chip leadership in the AI era.

Samsung Electronics shares on the Kospi closed trading at 50,600 won on Wednesday, dropping by 2,400 won or 4.53 percent from the previous trading day. Shares of the company started the day at 52,000 won but dropped to as low as 50,500 won, hitting the lowest intraday trading level since June 2020.

With the plunge in price, the market capitalization of Samsung Electronics fell to 302.71 trillion won, shedding over 200 trillion won from its July valuation of around 520 trillion won.

The nosedive in Samsung Electronics' share price reflects escalating concerns about the business outlook of Korean chipmakers after US President-elect Donald Trump returns to the White House. Investors fear Trump's potential tariffs on Chinese imports could weigh heavily on local semiconductor companies, including Samsung Electronics.

Shares of Samsung Electronics' Korean rival SK hynix inched down 1.56 percent to 182,900 won.

Foreign investors dumped a net 734 billion won shares of Samsung Electronics and 49 billion won of SK hynix. In total, they net sold shares worth 713 billion won. It was the largest foreign sell-off since the 858 billion won sold on Oct. 31.

The massive exit from Samsung Electronics pulled the benchmark Kospi down to a close of 2,417.08, down 65.49 points or 2.64 percent on-day. Following the market's decline the previous day, Kospi opened at 2,468.27 and inched down to as low as 2,415.77.

Of the Kospi's overall decline for the session, Samsung Electronics accounted for 16.1 percent of it, considerably outweighing the impact of the second-biggest contributor, LG Energy Solution, at 3.8 percent.

“The Korean bourse took a direct blow, plunging due to the increasing concerns in the chip sector that the trade war between the US and China will reignite following Trump’s win in the election,” Lee Kyung-min, an analyst from Daishin Securities, said.

“Yet the current level of Kospi has already priced in the difficulties of an economic slowdown. If foreign uncertainties ease, it could rebound as it did in November and December last year.”

Alongside the weakened stock market, the Korean won has been losing value against the US dollar. The value of the local currency against the greenback stood at 1406.6 won when daytime trading closed, weakening by 3.1 won from the previous day. The won reached a two-year low of 1,410.6 won during trading hours.

By Im Eun-byel (silverstar@heraldcorp.com)