South Korean shares fell on Monday, tracking losses in US technology stocks as concerns over the sustainability of artificial intelligence (AI) investments weighed on investor sentiment. However, dip buying helped the benchmark recover from a sharp early decline, according to a report by Reuters.

The benchmark Kospi was down 34.04 points, or 0.60%, at 5,634.01 as of 0153 GMT. The index opened sharply lower and dropped more than 3% before erasing losses and briefly turning positive.

The South Korean market suffered its biggest weekly decline in 18 years last week, driven by a sell-off in semiconductor stocks amid growing concerns about the returns on massive AI-related investments.

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According to Reuters, Wall Street ended sharply lower on Friday, with AI-linked technology stocks, including CoreWeave and Broadcom, facing renewed selling pressure. A jump in oil prices also unsettled investors ahead of the weekend.

Semiconductor stocks remained under pressure on Monday, with SK Hynix falling 3.22%. Samsung Electronics shed 0.12% after declining more than 3% earlier in the session.

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However, gains in other heavyweight stocks helped limit the benchmark's losses. Battery maker LG Energy Solution climbed 4.71%, while Hyundai Motor and Kia Corp advanced 2.40% and 3.18%, respectively.

POSCO Holdings rose 3.37%, while Samsung BioLogics surged 6.70%.

Market participants continued to look for opportunities in stocks that had suffered steep losses. The report stated that analysts saw scope for dip buying as semiconductor shares remained in oversold territory.

Market breadth was negative, with 483 stocks declining against 388 advancing among the 913 issues traded.

Foreign investors were net sellers of South Korean shares worth 38.3 billion won ($28.7 million).

In currency markets, the South Korean won strengthened 0.15% to 1,334.5 per dollar on the onshore settlement platform, compared with its previous close of 1,336.5.

In the bond market, December futures on three-year Korean Treasury bonds fell 0.01 point to 103.04. The yield on the most liquid three-year Korean Treasury bond declined 3.3 basis points to 3.849%, while the benchmark 10-year yield edged up 0.7 basis points to 4.170%, as per the report.

(Disclaimer: This article is based on inputs from agencies. These do not represent the views of The Economic Times)