South Korea's KOSPI Index saw an intraday plunge of up to 10%, eventually closing down roughly 7%-8% as intense selling swept through large caps and derivative desks. To curb the extreme volatility, the Korea Exchange simultaneously triggered circuit breakers on both KOSPI and KOSDAQ, halting trading temporarily to steady sentiment and restore price discovery.
This market turmoil was chiefly driven by external forces. Persistent tensions in the Middle East sent international oil prices sharply higher, exerting notable pressure on energy-import-dependent South Korea. Rising energy costs dampen corporate profit forecasts while intensifying weakness in the won, which then feeds through to the stock market. South Korea's Deputy Prime Minister and Finance Minister Choi Sang-mu said the magnitude of this fall far exceeds shifts in the domestic economy and financial fundamentals, stressing that external shocks are the primary cause.
The KOSDAQ tech board tumbled alongside, liquidity tightened, and intraday swings widened. Reports diverge on whether the "sidecar mechanism" was activated, but traders generally agreed that program trading in the futures market was muted amid the tumultuous moves. The won weakened against the dollar, and investor risk appetite clearly deteriorated. Semiconductor-linked names, including tech giant Samsung, faced heavy selling, becoming a significant drag on the index.
Authorities have launched a 24-hour cross-agency monitoring mechanism, with fiscal and financial regulators assessing whether to deploy stabilization tools to prevent an irrational rout. Bank of Korea Governor Lee Chang-yong told parliament in a report that although volatility has heightened, no structural downside risks currently exist; attention should instead focus on valuation gaps in the artificial intelligence sector and external policy shocks.
Meanwhile, the crypto market also reflected risk-off sentiment, with Klaytn (KLAY) trading around $0.05358. The 8.62% daily volatility and an RSI of 19 signal subdued risk appetite across digital assets, which, while not directly dictating equities, offer supporting context for the broader sentiment landscape.