South Korean stocks faced a significant decline, dropping more than 6% on Monday. This was driven by investors selling off market heavyweights due to a tech slump caused by a US chip decline and worries about a potential hawkish shift by the US Federal Reserve. The local currency also weakened sharply against the US dollar, hitting a 17-year low.
The benchmark Korea Composite Stock Price Index (KOSPI) fell by nearly 9%, plunging 6.04% to 7,667.79 points. Following this sharp drop, the Korea Exchange (KRX) activated a circuit breaker for the KOSPI, pausing trading for 20 minutes shortly after opening. Additionally, a consecutive sell-side sidecar was implemented.
Major US stock indexes experienced significant losses last week, with semiconductor shares seeing their largest daily percentage decline since March 2020. Concerns were further fueled by a stronger-than-expected US jobs report for May, raising fears of a potential rate hike by the Fed later in the year. The Dow Jones Industrial Average closed 1.35% lower, the S&P 500 dropped 2.64%, and the Nasdaq composite slid 4.18%.
