South Korea’s benchmark index KOSPI plunged 12.06% on Wednesday, while the small-cap KOSDAQ index dropped 14% — both record single-day losses.
Combined with the previous day (-7.24%), this marks the largest two-day crash since 2008.
The details
Trigger: The coordinated U.S.–Israeli airstrikes on Iran over the weekend. Oil prices surged, putting particular pressure on South Korea, the world’s eighth-largest crude oil consumer.
Circuit breakers were triggered on both markets simultaneously, halting trading for 20 minutes.
Samsung Electronics: -11.74%
SK Hynix: -9.58%
Hyundai Motor: -15.8%
LG Energy Solution: -11.58%
Out of more than 800 KOSPI stocks, only 10 closed higher — almost all of them energy companies.
The won briefly broke past 1,500 per dollar, a level last seen in March 2009 during the global financial crisis.
Institutional investors sold a net 588.8 billion won. Retail and foreign investors stepped in to buy but were unable to absorb the sell-off.
Context
The KOSPI had already surged nearly 50% this year, driven by AI optimism, a global chip shortage, and corporate governance reforms.
Retail investors piled in using leverage, pushing margin debt to record highs. In some cases investors used only 30–40% of their own capital, borrowing the rest.
Now those same positions are being forcibly liquidated. What accelerated the rally is now amplifying the downside just as quickly.
The 12.06% daily drop even exceeds the September 12, 2001 decline (-12.02%), when markets crashed following the terrorist attacks.
Despite the crash, the KOSPI remains up 21% year-to-date. Meanwhile, the government has activated a 100-trillion-won market stabilization program.
👉 Sources: Korea Herald, Business Times, Yonhap
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