South Korea Stocks Plunge, Won Hits 17-Year Low Amid Middle East Fears

Seoul’s main stock index plunged 6.49 percent Monday, marking its steepest fall in months, as escalating tensions between the United States and Iran rattled global markets and sent investors fleeing from risk assets. The Korea Composite Stock Price Index (KOSPI) closed at 5,405.75, a loss of 375.45 points, although the Korean won slid to a 17-year low against the U.S. Dollar.

The sell-off was triggered by a hardening stance from Washington, with President Trump reportedly giving Tehran a 48-hour ultimatum to reopen the Strait of Hormuz, a vital waterway for global oil supplies, or face potential military action. Iran responded with a warning that it could indefinitely close the strait if the U.S. Were to act on its threat, further intensifying the crisis.

Trading was so volatile that the Korea Exchange halted program trading for five minutes after the KOSPI’s opening bell, marking the sixth such “sell-side sidecar” event this year. A total of 1.1 billion shares, worth 27 trillion won (approximately $20.8 billion), changed hands, with losing stocks overwhelming winners by a ratio of 861 to 52.

Analysts pointed to a confluence of factors driving the market downturn. “Offshore and institutional investors unloaded large-cap shares, amid a triple burden of high oil prices, U.S. Rate uncertainties and geopolitical tensions,” said Lee Kyoung-min of Daishin Securities. Foreign and institutional investors collectively sold 7.5 trillion won ($4.9 billion) worth of equities, though retail investors partially offset the decline with 7 trillion won in purchases.

Blue-chip companies bore the brunt of the selling pressure. Samsung Electronics, South Korea’s largest company, fell 6.57 percent to 186,300 won. SK hynix, a major memory chip manufacturer, dropped 7.35 percent to 933,000 won. Automaker Hyundai Motor declined 6.19 percent to 485,000 won, while defense contractor Hanwha Aerospace saw a 3.18 percent decrease to 1,278,000 won. Even KB Financial Group, a leading financial institution, was not immune, falling 6.38 percent to 145,300 won.

Shipping companies also experienced losses despite expectations of increased freight rates due to potential disruptions in the Middle East. HMM declined 6.78 percent to 19,810 won, and Hyundai Glovis moved down 6.29 percent to 216,000 won.

The won’s value continued its downward trend, reaching 1,517.3 against the U.S. Dollar as of 3:30 p.m. Local time. This is the lowest the won has traded since March 9, 2009, during the height of the global financial crisis.

Hana Financial Group has announced a humanitarian support program for Korean citizens affected by the conflict in the Middle East, providing daily necessities and relief packages, though the bank has not commented on the impact of the market volatility on its financial position.