Kospi Drops More Than 2% as Broadcom Outlook Disappoints, Middle East Tensions Escalate

"Won at 1,530 per dollar adds pressure; intraday volatility expected"

South Korea's Kospi fell more than 2% in early trading on June 4 after U.S. chipmaker Broadcom issued a revenue outlook that missed market expectations and Middle East tensions flared again following Iran's strike on Kuwait.

The Kospi was down 208.81 points, or 2.37%, at 8,592.68 as of 9:20 a.m., according to the Korea Exchange. Individuals and institutions were net buyers of 1.2644 trillion won and 275.9 billion won, respectively, while foreigners were net sellers of 1.5733 trillion won.

The decline came as U.S. technology shares weakened after Broadcom gave a softer-than-expected forecast for third-quarter artificial intelligence semiconductor revenue, with geopolitical uncertainty surrounding the U.S. and Iran also weighing on sentiment. Reuters reported that Broadcom posted fiscal second-quarter revenue of $22.27 billion.

Broadcom said third-quarter AI chip revenue would reach $16 billion, slightly below the market forecast of $16.36 billion, Reuters said. Seo Sang-young of Mirae Asset Securities said the weaker-than-expected AI chip sales outlook hurt global sentiment toward AI-related investments.

Large-cap stocks also fell across the board. Samsung Electronics dropped 1.80%, SK Hynix slid 2.71%, Samsung Electronics preferred shares lost 2.59%, SK Square fell 1.15%, Hyundai Motor retreated 3.98%, Samsung Electro-Mechanics declined 2.15% and LG Energy Solution dropped 3.05%.

By contrast, the Kosdaq rose 33.68 points, or 3.28%, to 1,059.71. Foreigners and institutions bought a net 30.7 billion won and 60.3 billion won, respectively, while individuals sold a net 87.9 billion won.

Among Kosdaq heavyweights, EcoPro BM rose 3.54%, Alteogen gained 2.10%, EcoPro climbed 6.11%, Jusung Engineering advanced 9.95%, Kolon TissueGene added 4.81%, Samchundang Pharm rose 5.96% and Leeno Industrial gained 6.03%.

Seo said the Kosdaq, which had posted steeper losses recently, was showing relative strength as funds flowed into large-cap pharmaceutical, biotech and battery stocks.

The won opened sharply weaker in the 1,530 range against the dollar. In Seoul's foreign-exchange market, the Korean currency traded at 1,530 per dollar, down 13.6 won from the previous session's daytime close.

Han Ji-young of Kiwoom Securities said South Korean stocks were set for a volatile session on June 4 as Broadcom fell in after-hours trading and external uncertainty mounted, despite a more than 7% jump in the Philadelphia Semiconductor Index during the market holiday and expectations for Nvidia Chief Executive Officer Jensen Huang's visit to South Korea.

Kang Kyung-ju, Hankyung.com reporter qurasoha@hankyung.com