The local currency also weakened against the U.S. dollar, News.Az reports, citing Yonhap.
The benchmark Korea Composite Stock Price Index (KOSPI) dropped 74.43 points, or 1.44 percent, to close at 5,089.14.
Trading activity was heavy, with 738.6 million shares changing hands for a total value of 29.4 trillion won (about $20 billion). Decliners significantly outpaced gainers by 702 to 189.
Foreign investors sold a net 3.3 trillion won worth of shares, while retail investors posted net purchases of 2.1 trillion won. Institutional investors also bought shares, with net purchases totaling 960 billion won.
Market analysts said Seoul shares retreated as investors took profits following a recent record-breaking rally, particularly in technology stocks, amid renewed worries about the earnings outlook for AI-related firms.
“Growing concerns over the profitability of Microsoft, Google and Amazon, along with their expanding investments in AI, have triggered broad selling in technology shares,” said Lee Kyoung-min, a researcher at Daishin Securities.
Lee added that investors also appear to be trimming positions amid volatility in other asset classes, including silver and cryptocurrencies.
Tech heavyweights moved lower, with Samsung Electronics slipping 0.44 percent to 158,600 won, while chipmaker SK hynix fell 0.36 percent to 839,000 won.
Battery makers also closed in negative territory. LG Energy Solution declined 2.53 percent to 385,000 won, and Samsung SDI dropped 4.02 percent to 370,000 won.
Automakers recorded sharp losses, with Hyundai Motor plunging 4.3 percent to 467,500 won, while affiliate Kia slid 2.75 percent to 151,900 won.
In contrast, game developer Netmarble surged 7.68 percent to 54,700 won, a day after reporting record fourth-quarter sales for 2025.
The Korean won was quoted at 1,469.5 won per U.S. dollar at 3:30 p.m., down 0.5 won from the previous session.
Bond prices closed lower, tracking higher yields. The yield on three-year government bonds rose 2.9 basis points to 3.233 percent, while the yield on benchmark five-year bonds increased 1.6 basis points to 3.521 percent.
