South Korean shares drop as chipmakers slump

Round-up of South Korean financial markets:

** South Korean shares dropped more than 5% on Tuesday, dragged by chipmakers, as investors worried about whether record earnings driven by AI demand would be sustainable.

** The benchmark KOSPI KRX:KOSPI was down 455.23 points, or 5.65%, at 7,596.10 as of 0131 GMT.

** During the session, sharp losses in the index triggered a "sidecar" trading curb, temporarily halting programme trading.

** Samsung Electronics KRX:005930 fell 7.47%, even as the chipmaker forecast a 19-fold jump in second-quarter operating profit from a year earlier, surpassing its combined earnings over the past three years as it rides an AI boom that has driven memory chip prices to record highs.

** "It is good news but can't be interpreted entirely as good news, as market expectations have grown too high to be raised further, fanning worries that high earnings will not be sustained," said Seo Sang-young, an analyst at Mirae Asset Securities.

** Peer chipmaker SK Hynix KRX:000660 lost 6.70%.

** LG Energy Solution KRX:373220 slid 6.77%, after the battery maker expected its April-June operating profit to fall 77%, as sluggish electric-vehicle demand continued to weigh on battery sales.

** Hanwha Ocean KRX:042660 plunged 22.91% after Canada selected German submarines over South Korean competitors in an ongoing contract battle.

** Hyundai Motor KRX:005380 and sister automaker Kia Corp KRX:000270 were down 6.57% and 5.66%, respectively. Steelmaker POSCO Holdings KRX:005490 shed 3.27%, while drugmaker Samsung BioLogics KRX:207940 fell 0.57%.

** Of the 910 issues traded, 357 advanced, while 511 declined.

** Foreigners were net sellers of shares worth 1.3 trillion won ($851.45 million).

** The won was quoted at 1,528.9 per dollar on the onshore settlement platform FX_IDC:USDKRW, 0.07% higher than its previous close at 1,530.0.

** The most liquid three-year Korean treasury bond yield (KR3YT=RR) rose by 1.3 basis points to 3.783%, while the benchmark 10-year yield TVC:KR10 rose by 1.8 basis points to 4.219%.

($1 = 1,526.8000 won)