The KOSPI index plunged during intraday trading on the 28th, breaking below the 8,000 and then the 7,900 level in succession. The KOSDAQ index is also tumbling more than 5%. The sell-off appears to stem from overlapping risk factors, including U.S.-Iran clashes, the possibility of a Bank of Korea base rate hike, and a concentration in semiconductor stocks in the domestic market, which have sharply undermined investor sentiment.
According to the Korea Exchange (KRX), as of 1:27 p.m. the KOSPI was at 7,882.39, down 346.31 points (4.21%) from the previous trading day.
In the main board, foreign investors are net sellers of 2.7 trillion won. Individuals and institutions are net buyers of 2.5 trillion won and 144.3 billion won, respectively.
Losses are widening, led by large-cap semiconductor stocks that had driven the index higher through the previous day. Samsung Electronics and SK hynix are down in the 5% and 3% ranges, respectively. Related stocks such as SK Square (-7.84%) and Samsung C&T (-5.72%) are also posting steep declines.
At the same time, the KOSDAQ index was down 64.04 points (5.65%) at 1,069.09. In the KOSDAQ market, foreigners are net buyers of 160 billion won, while institutions are net sellers of 140 billion won. Individuals are also net sellers, but the size is limited.
All of the top 10 stocks by market capitalization are falling. Losses are widening, centered on bio and secondary-battery names such as Kolon TissueGene (-8.86%), Alteogen (-6.08%), and EcoPro (-3.71%).
Reuters, citing Iranian state media, reported that the Revolutionary Guard carried out a targeted strike on a U.S. Air Force base at about 4:50 a.m. on the 28th (local time). Iranian state television said the Revolutionary Guard attacked the air base it identified as the origin of the strike after U.S. forces bombed Bandar Abbas in southern Iran.
Although the target base was not disclosed specifically, a missile attack was detected in Kuwaiti airspace the same day, raising the possibility that Iran's target was a U.S. base in Kuwait.
At the Bank of Korea's monetary policy committee meeting held in the morning, the base rate was kept unchanged for the eighth straight time, but some board members voiced support for a hike and Governor Shin Hyun-song also suggested the possibility of a hike within the year, weighing on risk appetite.
Seo Sang-young, a researcher at Mirae Asset Securities, said, "As geopolitical risks escalated, foreign investors launched aggressive selling, led by sectors such as semiconductors that had seen big gains, widening the decline in the Korean market," and added, "There was also the burden from minority views in favor of a Bank of Korea rate hike and the resulting rise in Government Bonds yields."
A recent, extreme concentration in large-cap semiconductor stocks is also seen as a drag.
Han Ji-young, a researcher at Kiwoom Securities, said, "The gap between advancing and declining issues reached 748 the previous day, marking the first case in the history of the domestic market in which, during a rising market, the number of declining issues was overwhelmingly larger," and added, "Because it is the first such case, the inability to derive an outlook from past data is a source of uncertainty."