South Korean stocks slide as KOSPI falls 11%

Traders Union
All News
Financial News
KOSPI drops over 11%

Highlights

South Korea’s KOSPI plunged more than 11% amid escalating Middle East tensions, forcing a temporary trading halt.
Rising oil prices and a sharp drop in the won triggered risk-off selling by global investors.
Heavy losses in tech giants Samsung Electronics and SK Hynix dragged the market lower.

According to CNBC, investors began aggressively reducing risk exposure after a surge in oil prices and a sharp weakening of the South Korean won. The national currency briefly fell to levels not seen in nearly 17 years.

Tech giants drag the index lower

During the trading session, the KOSPI’s losses exceeded 12%, although the market later managed to recover part of the decline. Nevertheless, the index remained well below its previous levels. At the same time, volatility control mechanisms were triggered on the Kosdaq market, where the index dropped by about 13%.

At the time of publication, the KOSPI was trading around 5,124 points, showing a decline of 11.21% over the past 24 hours.

KOSPI index performance. Source: TradingView

Shares of the country’s largest technology companies were hit the hardest. Samsung Electronics fell by more than 9%, while SK Hynix dropped about 7%. Both companies account for a significant share of the index: according to Morningstar estimates, memory chip manufacturers make up nearly half of its weighting.

“The decline in the KOSPI index can largely be explained by the concentration of a single company’s stocks in the Korean market,” said Lorraine Tan, director of equity research for Asia at Morningstar.

Until recently, the situation looked very different. Over the past year, South Korea’s stock market surged on the back of global demand for memory chips and rapid growth in artificial intelligence technologies.

Oil and currency markets add pressure

Pressure on the market was intensified by the country’s dependence on energy imports. South Korea relies almost entirely on imported oil, with around 70% of supplies coming from the Middle East. Any escalation in the region quickly affects energy prices and investor sentiment.

“When oil prices spike and currency volatility increases sharply, particularly in oil-importing markets such as Korea and Japan, global funds typically move quickly to reduce exposure to the most liquid assets included in benchmark indices,” said Tarek Horchani of Maybank Securities.

The currency market also remained under pressure. The won briefly fell below the 1,500-per-dollar mark for the first time since 2009. The Bank of Korea and the Ministry of Finance said they were closely monitoring the situation and were ready to intervene if volatility intensified.

Why it matters for global markets

Analysts say the current sell-off looks more like a sharp correction after a period of rapid growth than a sign of fundamental economic weakness.

“This looks more like position unwinding and risk reduction than a fundamental deterioration in earnings,” said Tarek Horchani.

South Korea remains a key link in the global technology supply chain. Samsung Electronics and SK Hynix supply memory chips for servers and artificial intelligence infrastructure used by major technology companies in the United States and Asia.

Semiconductors play a critical role in the country’s economy. According to the South Korean government, they account for more than 20% of national exports. As a result, sharp movements in the Korean stock market are often seen by investors as an indicator of sentiment in the global technology sector and the artificial intelligence market.

This material may contain third-party opinions, none of the data and information on this webpage constitutes investment advice according to our Disclaimer. While we adhere to strict Editorial Integrity, this post may contain references to products from our partners.