Market UpdatesMar 03, 20262 Min

South Korea’s Kospi tumbles up to 7% to log worst fall in 19 months amid Middle East tensions

The benchmark index tanked below 6,000 for the first time in the past four sessions.

South Korea’s benchmark Kospi dropped up to 7% on Tuesday as the conflict between the United States, Israel and Iran intensified, sending oil prices above $80 a barrel.

South Korean stock markets opened for trading on Tuesday after a long weekend, marking the first session since the US and Israel carried out attacks on Iran on February 28. Benchmark Kospi fell by over 7% to hit a low of 5,791.65, dragged by heavy selling in Samsung Electronics and SK Hynix.

The barometer was trading at 5,791.91, down 7.24% . The index tanked below 6,000 for the first time in past four sessions. Kospi was the lead loser among Asian peers as Nikkei 225 dropped over 3%, Hang Seng by 1.24% and Shanghai by 1.43%.

Kospi had hit an all-time high of 6,347 on February 27. Korean markets were closed on Monday for a holiday.

Samsung, SK Hynix major drag on Kospi

Profit-taking in Samsung Electronics, SKY Hynix and Hyundai was the major reason for the worst fall in Kospi since 2024.

Technology major Samsung Electronics tanked up to 10% while SK Hynix dropped up to 11.5% as investors booked profits after a sharp rally in February on optimism around AI developments. Hyundai Motor also dropped up to 11%.

However, South Korean defence stocks surged up to 30% amid the global turmoil. Air defence systems maker LIG Nex1 was the lead gainer with a surge of 30% in stock price, while shares of Hanwha Aerospace, the country’s largest defence manufacturer, rallied up to nearly 25%. Shares of electronic warfare systems manufacturer Victek also jumped nearly 30%.

Middle East tensions impact investor sentiment

South Korean markets saw a major correction on Tuesday due to the widening conflict in the Middle East region. The conflict between the US, Israel and Iran has hit crude oil supplies from the Middle East, threatening to inflate energy bills and stoke inflation.

South Korean markets witnessed a rout on Tuesday, which was the first trading session since the US-Israel strikes on Iran on Saturday.

According to analysts, crude oil prices jumping to $80 a barrel and squeezing supplies from the Middle East fuelled the profit taking. The Middle East accounts for around 70% of Korea’s crude oil supplies. Experts believe, the disruption in oil supplies amid intensifying Middle East tensions may also stoke inflation and put pressure on the currency, ultimately hitting the valuations of equities.