Seoul: South Korean stocks plummeted over 5.5 percent on Monday, marking a fourth consecutive day of losses as investors reacted with panic to an intensifying global trade war initiated by U.S. reciprocal tariffs. The Korean won experienced its largest decline against the U.S. dollar since the COVID-19 pandemic.
According to Yonhap News Agency, the benchmark Korea Composite Stock Price Index (KOSPI) dropped by 137.22 points, or 5.57 percent, closing at 2,328.20. The tech-focused KOSDAQ index also fell by 5.8 percent. The stock market operator issued a sidecar order shortly after trading began, the first since August 2024, temporarily halting program purchasing following a significant drop in the KOSPI 200 index.
Trade volume was substantial, with 615.2 million shares changing hands, valued at 10.5 trillion won (US$7.16 billion). Losers outnumbered winners by a margin of 862 to 68. Foreign investors sold off 2.09 trillion won worth of local shares, while retail investors and institutions purchased 1.67 trillion won and 253.2 billion won, respectively.
The KOSPI’s sharp decline was driven by investor fears of an impending recession, following the Trump administration’s announcement of reciprocal tariffs. This prompted China to retaliate with 34 percent tariffs on U.S. goods and export controls on rare earth materials, with potential further actions hinted at in the near future. “Volatility in the Korean stock markets heightened on the Trump administration’s stronger-than-expected tariff policies,” remarked Park Seok-joong, an analyst at Shinhan Securities.
The impact was not limited to South Korean markets; Wall Street experienced its worst week since the COVID-19 pandemic, with the S and P 500 falling 6 percent, the Dow Jones Industrial Average declining 5.5 percent, and the Nasdaq composite dropping 5.8 percent.
In Seoul, major stocks hit their lowest levels in a year, with Samsung Electronics falling 5.17 percent to 53,200 won and SK hynix decreasing by 9.55 percent to 164,800 won. Automotive giant Hyundai Motor dropped 6.62 percent to 179,100 won, while defense leader Hanwha Aerospace plunged 8.55 percent to 642,000 won. Leading shipbuilders Hanwha Ocean and HD Hyundai Heavy fell by 9.81 percent and 8.17 percent, respectively.
The financial sector also suffered, 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., marking a 33.7 won decline from the previous session-the steepest single-day drop since March 19, 2020. Meanwhile, bond prices rose, as the yield on three-year Treasurys fell 5.6 basis points to 2.405 percent, and the yield on five-year government bonds decreased by 5.3 basis points to 2.491 percent.