South Korean stocks have plummeted by 10% in a single day but recovered by 3% due to the ongoing war in Iran that killed the former Supreme Leader Ayatollah Ali Khamenei.
Stocks ranging from electronics to shipping companies were heavily affected. KSS Line, HMM and Pan Ocean had plummeted by 16 to 17% while Samsung Electronics, LG Electronics and SK Hynix had also taken heavy losses.
Specifically, the Korean Composite Stock Price Index (KOSPI) took a 7.2% fall even though they had a strong start to 2026 as they grew more than 40% within the first two months. They had also reported that stocks are still plunging more than 18% this week which is the biggest loss since 2008.
Stocks around Asia have also begun to fall as the Japan Nikkei Index fell by 5.2%.
“South Korean financial authorities had earlier activated their 20-minute circuit breaker after losses passed the 8 percent threshold for triggering a halt to trading on the exchange,” according to Al Jazeera.
Moreover, to support the capital markets, President Lee Jay Myung had ordered the government to provide ₩100 trillion, which is around $68.3 billion, as the country has over 60% of South Korean investors.
Along with South Korean stocks, U.S. stocks also took a fall overnight as well with Nasdaq Composite and S&P500 plunging by 1%.
“About 70% of Korea’s oil imports and up to 30% of liquified natural gas comes from the Middle East, according to the U.S. Energy Information Agency,” CNBC reports.
But the interest in Artificial Intelligence (AI) such as software and infrastructure related to AI, has helped the Korean stock market. Now investors from around the world are coming to Seoul to invest in SK Hynix and Samsung Electronics because they are memory chip giants.
The Chosun Daily reports, “On this day, Samsung Electronics closed at 173,500 Korean won, down 7.81% from the previous trading day, while SK Hynix also plummeted by 9.52% to 836,000 Korean won. This erased all the gains made during the rebound in the latter half of last week.”
Then there is Direxion Daily MSCI South Korea Bull or Koru, which is an aggressive, high-risk, leveraged fund where retail investors had poured $190 million into an exchange trade fund (ETF) for $1 million.
Amplified swings in the stock market was caused by the surge in leveraged ETF trading, intensifying the plunge in South Korean equities as investors unravel their heavy leveraged wagers.
Other traders had also invested more than $520 in an ETF last week creating concern for hidden dangers and pressure for the national currency, the Won, rules have been tightened for.
Paul Singh Portfolio 