South Korean stocks took a significant hit, plummeting more than 5.5 percent on Monday. This marked the fourth consecutive day of losses, a trend triggered by panic selling in response to escalating global trade tensions sparked by US reciprocal tariffs. The Korean won also experienced its most significant fall since the COVID-19 pandemic against the U.S. dollar.
The Korea Composite Stock Price Index (KOSPI), the benchmark index, shed 137.22 points, or 5.57 percent, to close at 2,328.20. The tech-heavy KOSDAQ also experienced a significant dip of 5.8 percent. The steep decline prompted the bourse operator to issue the first sidecar order since August 2024, halting program purchasing for five minutes after the KOSPI 200 index shed over 5 percent for more than 1 minute.
The trading volume was notably heavy, with 615.2 million shares worth 10.5 trillion won ($7.16 billion) changing hands. Losers significantly outnumbered winners, with 862 to 68. Foreign investors offloaded 2.09 trillion won worth of local shares, while retail investors and institutions purchased 1.67 trillion won and 253.2 billion won, respectively.
Impact of US Tariffs and China’s Retaliation
The KOSPI’s sharp decline was primarily driven by investors’ growing fears of a recession following the Trump administration’s announcement of reciprocal tariffs last week. This announcement prompted China to retaliate with 34 percent tariffs on U.S. goods and export controls on rare earths, while also threatening additional steps in the near future.
Park Seok-joong, an analyst at Shinhan Securities, commented on the situation, stating, Volatility in the Korean stock markets heightened on the Trump administration’s stronger-than-expected tariff policies. He further added, None of the Korean export industries will be able to evade the influence of the U.S. tariff scheme.
This situation is reminiscent of Wall Street’s worst week since the COVID-19 pandemic last week, with the S&P 500 plunging 6 percent on Friday (U.S. time), while the Dow Jones Industrial Average plummeted 5.5 percent and the tech-heavy Nasdaq composite lost 5.8 percent.
Seoul’s Big-Cap Shares Hit Yearly Low
In Seoul, many big-cap shares slid to hit their lowest mark in a year. Market bellwether Samsung Electronics slid 5.17 percent to 53,200 won, and its chipmaking rival SK hynix shot down 9.55 percent to 164,800 won. Top carmaker Hyundai Motor sank 6.62 percent to 179,100 won, and major defense firm Hanwha Aerospace plunged 8.55 percent to 642,000 won.
Leading shipbuilders Hanwha Ocean and HD Hyundai Heavy plummeted 9.81 percent and 8.17 percent to 62,500 won and 275,500 won, respectively. Major bio company Samsung Biologics lost 5.71 percent to 1.01 million won, and steel giant POSCO Holdings slumped 6.59 percent to 255,000 won. Financial shares also sharply went down, with KB Financial dipping 6.95 percent to 72,300 won and Meritz Financial losing 5.66 percent to 111,700 won.
The local currency was quoted at 1,467.8 won per dollar at 3:30 p.m. local time, down 33.7 won from the previous session. This marked the steepest single-day decline since March 19, 2020, when the currency dropped by 40 won amid the COVID-19 pandemic.