An electronic board showing the Korea Composite Stock Price Index at a dealing room of the Hana Bank headquarters in Seoul on Tuesday. (Yonhap)
An electronic board showing the Korea Composite Stock Price Index at a dealing room of the Hana Bank headquarters in Seoul on Tuesday. (Yonhap)

Seoul shares fell by more than 2 percent Tuesday, snapping their five-day winning streak, as investors moved to take profit after a record-breaking run amid an impasse in peace negotiations between the United States and Iran. The local currency sharply fell against the US dollar.

After rising as high as 7999.67 shortly after the opening bell, the benchmark Korea Composite Stock Price Index fell 179.09 points, or 2.29 percent, to close at 7,643.15.

The index fell as low as to 7,423.11.

Trade volume was heavy at 1.02 million shares worth 66.6 trillion won ($44.8 billion), with losers outnumbering winners 731 to 145.

Foreigners unloaded local shares worth a net 5.6 trillion won, continuing their sell-off for the fourth straight day, while institutions dumped 1.2 trillion won. Retail investors scooped up 6.68 trillion won.

Market watchers' eyes were on whether the Kospi would reach the unprecedented level of 8,000 points Tuesday on the back of an extended rally of big-cap tech shares, including Samsung Electronics and SK hynix, created by artificial intelligence optimism.

The index, however, lost ground on profit-taking sentiment and dimmed hopes over the end of the US-Israeli war against Iran.

Earlier in the day, Trump said he is considering renewing "Project Freedom," an initiative aimed at helping guide stranded vessels through the Strait of Hormuz.

He also said the ceasefire with Iran was on "massive life support," while calling Iran's peace offer a "piece of garbage."

"As the Kospi's recent rally was largely driven by the strong performance of large-cap semiconductor stocks, the index is experiencing a pullback as investors are moving to take profit," Lee Kyoung-min, an analyst at Daishin Securities, said noting the sharp fall in blue chip US tech shares, including Micron and SanDisk, during after-hours trading also sapped investors' risk appetite.

Remarks by Seoul's presidential policy chief Kim Yong-beom on profit sharing of tech companies in the AI era also weighed down on investor sentiment.

"The fruits from the AI infrastructure era are not generated by only a handful of companies," Kim wrote on social media, proposing what he calls a "national dividend system."

Market top-cap Samsung Electronics closed 2.28 percent lower at 279,000 won, and its chipmaking rival SK hynix lost 2.39 percent to 1.84 million won.

Artificial intelligence investment firm SK Square slid 5.14 percent to 1.13 million won, and trading firm Samsung C&T slipped 3.76 percent to 435,000 won.

Leading battery maker LG Energy Solution plunged 5.34 percent to 443,000 won, while its smaller rival Samsung SDI nosedived 8.04 percent to 629,000 won.

Electrical and shipbuilding shares were mixed.

HD Hyundai Electric dropped 3.89 percent to 1.3 million won, and LS Electric dipped 4.93 percent to 289,000 won, but Samsung Electro-Mechanics surged 6.44 percent to 958,000 won.

Major shipbuilder Hanwha Ocean contracted 6.51 percent to 122,000 won, and HD Korea Shipbuilding went down 2 percent to 464,500 won, while HD Korea Shipbuilding jumped 3.21 percent to 707,000 won.

Notably, home appliances maker LG Electronics skyrocketed 18 percent to 184,900 won on expectations for its robotics business.

The Korean won was quoted at 1,489.9 won against the US dollar at 3:30 p.m., sliding 17.5 won from the previous session, affected by the heavy foreign sell-off of Korean stocks. (Yonhap)