Seoul shares experienced a significant drop of more than 12% on Wednesday, closing below the 5,100-point mark. This decline was driven by mounting worries about the economic impact of the escalating conflict in the Middle East, which negatively affected investor confidence. The Korean won also saw a sharp decrease against the US dollar.
The benchmark Korea Composite Stock Price Index (KOSPI) fell by 698.37 points, representing a 12.06% decrease, to end at 5,093.54. This drop marked the most substantial one-day decline since September 12, 2001, following the September 11 terrorist attacks in the United States. Trade volume was notably high at 1.6 billion shares valued at 62.6 trillion won ($42.5 billion).
The Korea Exchange (KRX) activated circuit breakers after the KOSPI plummeted over 8% due to heightened geopolitical tensions. During the session, the KRX implemented a temporary halt on program-driven sell orders in KOSPI futures by activating a five-minute sell-side sidecar. A similar measure was taken in the tech-heavy KOSDAQ market.
Institutions were net sellers of stocks worth 579.4 billion won, counterbalancing the stock purchases by foreigners and individuals amounting to 228.78 billion won and 72.9 billion won, respectively. Analysts noted that institutional investors continued as net sellers for the second consecutive session, attributing this trend to the escalating tensions in the Middle East, which pushed the index below the 6,000-point threshold.
