The benchmark KOSPI closed at 6,909.91, down 1.76 percent from the previous session. The index opened 3.29 percent lower at 6,802.50 before recovering part of its losses in afternoon trading.
Foreign investors sold a net 2.29 trillion won (US$1.70 billion) of KOSPI shares, while institutions unloaded 1.23 trillion won. Retail investors bought a net 1.87 trillion won, helping the index recover from a drop of more than 3 percent at the open.
The KOSPI nevertheless recovered more than 100 points from its opening level as bargain hunting strengthened and oil prices eased from their overnight surge during Asian trading.
Brent crude and West Texas Intermediate both pulled back after surging more than 6 percent overnight, though both remained above $100 a barrel. Brent fell about 1.9 percent to $105.62, while WTI slipped 1.4 percent to $101.10. Reports that Middle Eastern officials were seeking a temporary arrangement with Iran over shipping through the Strait of Hormuz helped prices retreat from earlier highs.
Easing oil prices took some of the pressure off equities, but concerns over inflation and interest rates remained. The U.S. 10-year Treasury yield hovered near 5 percent, while the 30-year yield reached its highest level in nearly two decades. Investors also remained cautious ahead of the U.S. August consumer price index report due later in the day, with markets pricing in about a 70 percent chance of a quarter-point Federal Reserve rate increase next week.
The pressure carried into Seoul's chip sector, though losses narrowed later in the session. Samsung Electronics and SK hynix remained under pressure but recovered from steeper morning losses. Fresh trade data released during the session showed a sharp increase in semiconductor exports, offering some support to chip shares.
Samsung Electronics closed down 3.35 percent to 260,000 won, while SK hynix fell 2.05 percent to 1,815,000 won.
Semiconductor exports reached $16.48 billion in the first 10 days of September, up 270.1 percent from a year earlier and accounting for 47.1 percent of the country's total exports during the period, according to data released Friday by the Korea Customs Service.
Other major KOSPI stocks were broadly lower. SK Square dropped 4.14 percent to 1,088,000 won, and Samsung C&T fell 3.29 percent to 367,000 won.
Hyundai Motor lost 1.80 percent to 382,000 won and LG Energy Solution declined 1.64 percent to 359,000 won.
Samsung Biologics fell 1.05 percent to 1,408,000 won, while Samsung Life Insurance dropped 1.29 percent to 305,500 won. Samsung Electro-Mechanics edged down 0.29 percent to 1,396,000 won.
KB Financial bucked the broader decline, rising 2.02 percent to 176,900 won.
Losses also extended to the junior KOSDAQ, which closed at 820.64, down 1.95 percent.
Retail investors bought a net 511.8 billion won, while foreign investors sold 312.0 billion won and institutions unloaded 216.0 billion won.
The stocks were broadly lower at the close. Biotech company Alteogen, which develops drug-delivery and biosimilar technologies, fell 3.61 percent to 267,000 won. Battery materials holding company EcoPro dropped 3.11 percent to 84,200 won, while its cathode-materials affiliate EcoPro BM slid 6.99 percent to 110,400 won.
Robotics shares also weakened. Rainbow Robotics, which develops humanoid, collaborative and mobile robots, fell 2.78 percent to 436,500 won. ROBOTIS, a maker of smart robot actuators and humanoid platforms, finished unchanged at 323,500 won.
Semiconductor equipment and component makers were mostly lower. EO Technics, which makes laser equipment used in semiconductor and electronics manufacturing, declined 2.09 percent to 445,500 won. LEENO Industrial, a semiconductor test-component maker, fell 3.46 percent to 66,900 won. Simmtech, which produces printed circuit boards and package substrates for semiconductors, lost 1.72 percent to 131,600 won.
ISC, which produces semiconductor test sockets and related testing solutions, edged down 0.26 percent to 190,100 won. Biopharmaceutical company HLB fell 0.79 percent to 31,400 won.
The broader risk-off move was not confined to Seoul. Asian stocks also retreated as higher oil prices and rising bond yields kept investors cautious. Japan's Nikkei 225 was down 1.93 percent at 64,011.34. The Shanghai Composite fell 1.18 percent to 3,888.11 at the close, while Hong Kong's Hang Seng Index was down 0.67 percent at 24,787.90.
Japanese shares were among the hardest hit, with higher global yields weighing on technology stocks while expectations for tighter Bank of Japan policy added pressure after wholesale inflation accelerated 7.6 percent from a year earlier.
Chinese and Hong Kong shares also weakened as investors remained cautious over the global inflation outlook and the risk that elevated energy costs could keep monetary policy tighter for longer.
Investors are now awaiting the U.S. August CPI report, which could affect expectations for a Fed rate increase next week.
AJP Takeaways
- South Korea's KOSPI closed down 1.76 percent at 6,909.91 on Sept. 11, falling back below 7,000 as foreign and institutional investors sold heavily.
- Samsung Electronics and SK hynix both fell on Sept. 11, although the two chipmakers narrowed steeper morning losses as South Korea's semiconductor exports showed a sharp year-on-year increase in the first 10 days of September.
- Oil prices above $100 and the U.S. 10-year Treasury yield near 5 percent heightened inflation and rate concerns ahead of the U.S. August CPI report and next week's Federal Reserve meeting.
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