‘Black Tuesday’: KOSPI Plunges 7%, Breaks Below 5,800 in Record Drop
Amid escalating geopolitical tensions in the Middle East following intensified military clashes between the United States and Iran, South Korea’s stock market suffered a “Black Tuesday” on the 3rd. The KOSPI tumbled more than 7%, falling below the 5,800 level, with both the point decline and percentage loss nearing historic records.
The benchmark index closed at 5,791.91, down 452.22 points (7.24%) from the previous session. This marked the largest point drop on record and the steepest percentage decline since Aug. 5, 2024 (-8.77%). After opening at 6,165.15, the index slid to an intraday low of 5,791.65.
Foreign Investors Dump Over KRW 5 Trillion; Sidecar Triggered
Foreign investors led the sell-off. On the main bourse, they posted net sales of KRW 5.1731 trillion, the second-largest on record, dragging the index sharply lower. Institutional investors also sold a net KRW 889.5 billion. Retail investors, however, bought a net KRW 5.8006 trillion, attempting to cushion the fall, but were unable to offset the heavy selling pressure.
The KOSPI 200 futures index plunged more than 5% around noon, triggering a sidecar — a temporary halt on program trading sell orders — for the first time in a month.
The VKOSPI, often referred to as Korea’s “fear gauge,” surged 16.37% to close at 62.98, its highest level since March 2020.
Total market capitalization on the KOSPI shrank to KRW 4,769 trillion, falling below KRW 5,000 trillion for the first time in four trading sessions.
Samsung Electronics, SK Hynix Slide; Chipmakers Hit Hard
Major blue-chip stocks posted steep losses:
- Samsung Electronics -9.88% (fell below KRW 200,000)
- SK Hynix -11.50% (fell below KRW 1,000,000)
- Hyundai Motor Company -11.72%
- Kia Corporation -11.29%
- LG Energy Solution -7.96%
Analysts said accumulated valuation 부담 following recent rallies, combined with war-related risks and a sharp rise in the exchange rate, triggered heavy profit-taking.
Defense, Oil Refiners Rally
In contrast, defense and oil refining stocks surged amid heightened geopolitical risks:
- Hanwha Aerospace +19.83%
- Hanwha Systems +29.14%
- Hyundai Rotem +8.03%
- S-Oil +28.45%
- SK Innovation +2.51%
The gains reflected expectations of benefits from surging global oil prices.
Won Weakens to 1,466.1 Per Dollar
In the Seoul foreign exchange market, the Korean won weakened sharply, with the won-dollar exchange rate rising 26.4 won to close at 1,466.1 per dollar. Investors priced in the possibility of prolonged regional instability and further depreciation pressure on the local currency.
Concerns intensified after Iran signaled the possibility of closing the Strait of Hormuz, sending global oil prices sharply higher and adding pressure on the Korean market, which is heavily dependent on Middle Eastern crude imports.
KOSDAQ Also Falls 4.6%
The tech-heavy KOSDAQ declined 4.62% to close at 1,137.70, with secondary battery and biotech shares leading the losses.
Key Variable: Duration of Tensions
Market participants expect geopolitical tensions to persist for the next three to four weeks. Some financial institutions have presented scenarios in which the KOSPI could face an additional correction of up to 13%.
However, others argue that improved semiconductor earnings and continued government policy support could limit the downside.
Ahead of the market opening, financial authorities convened an emergency meeting to assess market conditions and discuss response measures.
Whether the conflict de-escalates quickly or expands further will likely determine the extent of volatility in South Korea’s financial markets.
