Seoul Stocks Fall Amid DeepSeek Shock and Won Weakness

SEOUL, Jan. 31 -- South Korean stock markets saw a decline on Friday following a weeklong closure for the Lunar New Year holiday. This downturn was driven largely by a significant drop in technology shares after news about the Chinese artificial intelligence (AI) startup, DeepSeek, caused market jitters. Additionally, the Korean won hit a two-week low against the U.S. dollar.

The benchmark Korea Composite Stock Price Index, known as KOSPI, fell by 19.43 points, roughly 0.77 percent, closing at 2,517.37. The index had been closed from Monday through Thursday for the holiday.

Trading activity was moderate, with approximately 443 million shares exchanged, valued at about 13.3 trillion won (approximately US$9.14 billion). The number of losing stocks outnumbered the gaining ones, with 560 stocks declining compared to 333 that advanced.

Foreign investors sold off 1.2 trillion won worth of local shares. In contrast, retail investors and institutional buyers purchased a combined total of 1.16 trillion won in local stocks.

“The KOSPI experienced fluctuations in semiconductor and electronic shares as a result of the DeepSeek shock, which affected global stock markets during the holiday period,” stated Lee Kyoung-min, an analyst at Daishin Securities.

According to experts, DeepSeek has introduced AI models that are both cheaper and more efficient than existing models such as ChatGPT. This development raises fears that investments in advanced technology sectors, including chips and data centers, may dwindle.

Earlier in the week, markets were shaken by the competitive positioning of DeepSeek’s AI models against those offered by U.S. tech companies, largely due to their lower costs.

In the United States, major stock indexes posted gains as investors began buying technology shares again after earlier declines linked to the effects of DeepSeek.

In the Seoul market, shares of Samsung Electronics decreased by 2.42 percent, ending at 52,400 won, while its competitor in chip-making, SK hynix, plummeted by 9.86 percent to 199,200 won.

Notable declines were also seen in other firms; Samsung Biologics, a major biopharmaceutical company, fell 0.55 percent to 1.08 million won, and Hanwha Aerospace, involved in aerospace and defense, dropped 2.79 percent to 400,000 won.

Nevertheless, IT and software companies experienced growth, as the recent news about DeepSeek indicated that developing advanced AI models may not necessitate extensive computational resources like traditional AI chips.

Internet services provider Naver saw its shares rise by 6.13 percent to 216,500 won, while Kakao, known for its leading mobile messaging service, surged 7.27 percent to 38,350 won.

Financial stocks also performed well, with KB Financial up 3.15 percent to 91,700 won, Shinhan Financial gaining 2.2 percent to 51,100 won, and Meritz Financial climbing 4.48 percent to 114,200 won.

Additionally, construction and trading firm Samsung C&T rose by 4.26 percent, reaching 119,900 won, and Samsung Fire & Marine Insurance enjoyed a remarkable increase of 11.71 percent, closing at 381,500 won.

In the gaming sector, Krafton, the company behind the popular game PUBG: Battlegrounds, rose 6.12 percent to 364,000 won.

At approximately 3:30 PM, the local currency was trading at 1,452.7 won per U.S. dollar, a drop of 21.4 won from the previous session, marking its lowest value since January 17.

Seoul, Stocks, Market, DeepSeek, Won