South Korea's benchmark Kospi index plunged 8 per cent on Monday, triggering an automatic trading halt after panic selling swept through technology stocks amid escalating geopolitical tensions in the Middle East and renewed concerns over the global economic outlook. The sharp decline interrupted one of the world's strongest equity rallies this year and reflected a broader shift towards risk aversion across global financial markets.
The Korea Exchange suspended programme trading after the benchmark breached the exchange's 8 per cent circuit-breaker threshold. The halt was aimed at containing market volatility and preventing disorderly trading as investors rushed to exit equities.
Tech Stocks Lead Decline
Heavyweight chipmakers led the sell-off, with Samsung Electronics and SK Hynix suffering steep losses as investors reassessed lofty valuations following months of AI-driven gains. Technology stocks came under additional pressure after rising energy prices and fears of persistent inflation threatened the outlook for semiconductor demand and corporate earnings.
Investor sentiment deteriorated further after Iran's move to disrupt traffic through the Strait of Hormuz fuelled concerns over global oil supplies, sending crude prices sharply higher. The prospect of higher energy costs and slower global growth prompted investors to reduce exposure to risk assets across Asia.
The sell-off extended beyond South Korea, with Japan's Nikkei and other regional markets also ending lower as investors sought safe-haven assets. Futures indicated weakness in US and European equities, signalling broader concerns over the global growth outlook.
Despite the sharp correction, market analysts said the decline was driven largely by external shocks rather than any significant deterioration in South Korea's domestic economy. They expect volatility to remain elevated in the near term as investors monitor geopolitical developments, oil prices and the trajectory of global interest rates before rebuilding positions in technology and export-oriented stocks. |
