U.S. President Donald Trump signaled a powerful strike against Iran in the next two to three weeks, sending the Korean stock market plunging. Hopes for an end to the war were dashed in a day, throwing financial markets into panic. Stock indexes fell sharply, and the won tumbled against the dollar.
On the 2nd, the KOSPI ended trading at 5,233.79, down 244.91 points (4.47%) from the previous session. The KOSDAQ also closed at 1,055.47, down 60.71 points (5.44%). As index futures slumped during the session, a sell-sidecar that halts program trading sell quotes for five minutes was triggered simultaneously on the KOSPI and KOSDAQ.
The KOSPI was rising in early trading. With U.S. stocks climbing across the board overnight and hopes for an end to the war growing, preference for risk assets continued through the morning.
But around 10 a.m., sentiment reversed sharply as word spread of President Trump's first live national address since the Iran war began.
Trump said that "military operations against Iran are close to achieving their objectives," while threatening to "continue extremely powerful strikes on Iran over the next two to three weeks." He also said, "We will return Iran to the Stone Age where it belongs," and warned that if talks fail, he would strike oil facilities to give "not even a small chance to survive or rebuild."
Investors who had expected a message ending the war began dumping stocks. U.S. media said Trump's speech "contained nothing new" and were "remarks aimed at soothing public opinion after the war," but investors focused on the lack of a clear end-of-war message.
As foreigners' net selling continued, sell orders centered on exchange-traded funds (ETFs) hit the market. In the Korea Exchange, foreigners were net sellers by more than 100 billion won, and 1.7 trillion won of net selling came through the financial investment account. Only individuals were net buyers, at 1.2 trillion won. On the KOSDAQ, foreigners and institutions also posted heavy net selling.
The won also weakened sharply. As the won-dollar exchange rate spiked again, it ended the week's transactions at 1,519.7 won, up 18.4 won.
Most large-cap stocks fell. Samsung Electronics and SK hynix plunged 5% to 7% each, and Hyundai Motor fell nearly 5%. Large construction stocks such as Daewoo Engineering & Construction, which had risen recently on expectations of postwar reconstruction benefits, slumped.
On the KOSDAQ, biotech shares fell broadly. Sam Chun Dang Pharm plunged more than 18%, and ABL Bio and LigaChem Biosciences also showed steep declines.