Amid heavy selling by foreigners, the KOSPI index plunged more than 3% on the 19th, closing in the 7,200 range. With signs that tensions between the United States and Iran may drag on, keeping oil prices high, and U.S. Government Bonds yields staying elevated, analysts said foreigners' aversion to risky asset has strengthened.
The KOSPI index finished at 7,271.66, down 244.38 points (3.25%) from the previous trading day. Foreigners led the decline by net selling 626 billion won in the main board. In contrast, individuals were net buyers of 560 billion won, absorbing supply, and institutions net bought 526.4 billion won.
The KOSPI has continued extreme volatility after breaking above the 8,000 level intraday on the 15th. After swings of about 600 points and 500 points on the 15th and 18th, respectively, it also started in the 7,400 range on the day and at one point slid to the 7,100 range intraday, showing volatility of more than 300 points.
The market views heightened military tensions between the United States and Iran as the key factor dampening foreign investor sentiment. If concerns about a prolonged war keep international oil prices high, inflation pressures will grow, leading to higher interest rates. When rates stay elevated, equity markets see lower corporate value due to higher discount rates, and in credit markets, funding expense rises, weighing on stocks.
U.S. President Donald Trump said on Truth Social on the 18th (local time) that "at the request of key Middle Eastern countries, including the United Arab Emirates (UAE), I called off the Iran strike planned for the 19th," but added, "I instructed that preparations be made for an immediate, full-scale and massive strike if an acceptable agreement is not reached."
Accordingly, international oil prices and U.S. Government Bonds yields remained elevated. Brent crude traded near $110 per barrel, and the U.S. 10-year Government Bonds yield held around 4.59%. On foreign outflows, the won-dollar exchange rate also closed at 1,507.8 won on the day.
However, late in the session, shares pared some losses on speculation of progress in the labor talks at Samsung Electronics. A day earlier, President Lee Jae-myung said, "Labor should be respected as much as corporations, and corporate management rights should be respected as much as labor rights," and on the day, the National Labor Relations Commission, mediating post-adjustment, said, "Some differences between labor and management are narrowing."
Lee Kyung-min, a researcher at Daishin Securities, said, "With high oil prices, yields on the U.S. 10-year and 30-year Treasurys stayed around 4.6% and 5.1%, respectively, weakening foreigners' preference for risky asset and extending the KOSPI's nine-trading-day net selling streak," but added, "Expectations for the Samsung Electronics labor talks helped narrow losses."
On the main board, only 160 stocks rose, while 729 fell. By individual stocks, Samsung Electronics fell 1% and SK hynix fell 5%, closing at "2.7 million won Samsung" and "1.75 million won Nix," respectively. On the possibility of reignited Middle East tensions, only defense stocks such as Hanwha Aerospace and LIG Defense&Aerospace (formerly LIG Nex1) gained.
The KOSDAQ index closed at 1,084.36, down 26.73 (2.41%) from the previous trading day. After opening higher at 1,111.36, the index finished lower as institutions net sold 63.7 billion won. Individuals and foreigners had net buying advantages of 103.2 billion won and 1 billion won, respectively.
Alteogen alone rose 2% after effectively winning a patent lawsuit with Halozyme, while most of the top market-cap stocks, including Rainbow Robotics, ended lower.