South Korea's KOSPI 200 index dropped 6.3% in a single day, marking its steepest decline since early 2024, as fears of a broader Middle East war intensified. The sell-off weighed heavily on energy and defense-related equities, with global crude oil and mining stocks reacting sharply.
- KOSPI 200 fell 6.3% in one day, the worst drop since early 2024
- CL=F crude oil rose to $97.60 per barrel amid supply concerns
- Defense sector index declined 9.4%, led by Hanwha Aerospace and KAI
- POSCO and Korea Resources shares dropped 7.1% and 6.8%
- Korean won weakened 2.4% against the U.S. dollar
- KOV volatility index reached 38.7, highest since late 2023
South Korea’s stock market experienced its worst single-day selloff since January 2024, with the KOSPI 200 index closing down 6.3% amid escalating tensions in the Middle East. The decline followed an escalation in hostilities involving Iran and regional allies, raising concerns over potential disruptions to global energy flows and supply chains. Investors reacted swiftly, triggering widespread risk aversion across Asian markets. The defense sector was particularly hard hit, with shares of Hanwha Aerospace and Korea Aerospace Industries falling more than 8% each. The broader defense index within the KOSPI 200 dropped 9.4%, reflecting heightened uncertainty over future military spending and regional stability. Meanwhile, energy stocks suffered as global crude oil prices surged to $97.60 per barrel (CL=F), signaling market anxiety over potential supply disruptions from the Persian Gulf. The selloff extended beyond domestic equities. Metals and mining firms, including POSCO and Korea Resources, saw their shares drop by 7.1% and 6.8% respectively, as investors anticipated reduced industrial demand and higher volatility in raw material markets. The Korean won weakened by 2.4% against the U.S. dollar, adding pressure on import costs and inflation expectations. Market volatility, as measured by the CBOE Korea Volatility Index (KOV), spiked to 38.7, the highest level since late 2023. Financial institutions and export-dependent conglomerates bore the brunt, with Samsung Electronics and SK Hynix shedding over 5% each in intraday trading. The sell-off underscored the fragility of global risk sentiment in the face of geopolitical flashpoints.