South Korea's Stock Market Crashes

The downturn marks a dramatic reversal for what was one of the world's top-performing markets. Prior to the crash, the KOSPI had surged nearly 50% at its peak in 2026, fueled by the global AI boom and strong performance from its tech giants. The recent plunge has erased 817.6 trillion won (S$710 billion) in market value in just two days. The sell-off was severe enough to trigger circuit breakers on both the KOSPI and the secondary Kosdaq market, halting all trading for 20 minutes. This was the first time circuit breakers were activated for both markets simultaneously since August 2024. The crash is the worst single-day drop in the KOSPI's history, surpassing the 12.03% fall recorded after the 9/11 terrorist attacks in 2001. South Korea's high dependence on imported energy makes its economy particularly vulnerable to turmoil in the Middle East. The country sources approximately 70% of its crude oil from the region, with the majority passing through the Strait of Hormuz. Analysts estimate that a sustained 10% rise in oil prices could trim South Korea's GDP growth by 0.2 to 0.4 percentage points. The market's heavyweights, which had driven its earlier rally, led the decline. Samsung Electronics saw its shares plummet by 11.74%, while SK Hynix, another major chipmaker, dropped 9.58%. The Korean won also weakened significantly, at one point crossing 1,500 per U.S. dollar for the first time since March 2009. In response to the market turmoil, South Korea's Financial Services Commission has stated it is prepared to activate a market stabilization plan worth over 100 trillion won (USD 67.8 billion) if volatility intensifies excessively. Major financial groups have also initiated emergency support programs for companies exposed to risks from the Middle East conflict.