South Korea’s KOSPI index erased weeks of gains, dropping over 10% on Wednesday following intensified conflict in the Middle East triggered by U.S. military action against Iran. The slide follows a historic run for the Korean equity benchmark, which had surged 44% so far this year, surpassing 6,000 points—fueled largely by strength in semiconductor shares.
Investor sentiment reversed abruptly as the KOSPI broke through several key technical levels to close at 5,791 on Tuesday. Heavy selling hit major exporters, with Samsung Electronics down nearly 10%, SK Hynix off 11.5%, Hyundai Motor losing 11.7%, and Kia retreating 11.3%. The sell-off coincided with a weakening of the Korean won as overseas investors scaled back positions.
Trading activity on the Korea Exchange was interrupted amid the activation of multiple circuit breakers. Authorities temporarily suspended KOSPI 200 Futures trading on Tuesday following a drop exceeding 5%, marking the first such intervention since January. In addition, the Kospi index on Wednesday was paused shortly, and the Kosdaq market also saw its circuit breaker triggered as the losses surpassed 10%.
This sudden downturn followed a period of exceptional global attention on the Korean market for its outperformance. The renewed geopolitical risks have now erased much of those recently celebrated gains.
