South Korea’s main stock index recorded its worst single-day decline in nearly two decades on Wednesday. Rising oil prices and geopolitical tensions triggered a sharp selloff across Asian markets.
The benchmark KOSPI fell 12.1% to close at 5,093.54, its steepest drop since the 2008 financial crisis.
The decline followed a 7.24% fall on Tuesday, making the two-day slump the worst stretch for the index since the global financial crisis.
The Korea Exchange activated circuit breakers and temporarily halted trading after losses crossed the 8% threshold. A separate circuit breaker was triggered on the technology-heavy KOSDAQ, which ended the day 14% lower at 978.44.
Chipmakers Lead Market Losses
South Korea’s major semiconductor companies were at the center of the selloff.
Samsung Electronics and SK Hynix, which together represent roughly half of the KOSPI’s market capitalization, saw heavy declines.
Samsung Electronics fell nearly 12%, while SK Hynix dropped about 10%.
Both stocks had surged during 2025 as demand for memory chips used in artificial intelligence systems accelerated. That rally helped push the KOSPI more than 75% higher over the past year.
Market participants said leveraged retail trading intensified the downturn.
Kim Dojoon, chief executive at Seoul-based Zian Investment Management, said many investors had purchased shares using borrowed funds.
“There’s been significant buying on credit, particularly in large technology stocks, with investors putting down only 30 to 40 percent in margin deposits,” he said. “If markets continue to fall, investors may hesitate to step in.”
Foreign investors also contributed to the pressure. Overseas funds sold more than one trillion South Korean won in shares during the morning session.
Some local brokers responded by restricting margin lending, which further reduced buying support from retail investors.
Oil Shock Adds to Market Stress
The wider regional selloff followed escalating conflict involving Iran, now in its fourth day.
Reports that Tehran could move to close the Strait of Hormuz raised fears of disruption to global oil supply. The waterway carries roughly one-fifth of globally traded crude oil.
Energy markets reacted quickly.
U.S. benchmark crude rose to $75.46 per barrel, while Brent crude climbed to $82.61.
South Korea is particularly vulnerable to oil price shocks because of its reliance on energy imports. The country’s net oil imports equal about 2.7% of GDP.
Currency markets also reacted. The South Korean won weakened past 1,500 per dollar, its lowest level in 17 years.
Dave Mazza, chief executive at Roundhill Investments, said the selloff reflected a broader shift in global investor sentiment.
“When risk appetite drops and energy prices rise sharply, investors tend to reduce exposure quickly in the largest and most liquid stocks,” he said.
Losses Spread Across Asian Markets
The market decline spread across the Asia-Pacific region.
Japan’s Nikkei 225 fell 3.61% to 54,245.54, while Taiwan’s TAIEX dropped 4.4% amid weakness in semiconductor stocks.
Elsewhere, Hong Kong’s Hang Seng fell 2.9%, Shanghai’s Composite Index lost 1.2%, and Thailand’s stock market dropped about 8%.
The MSCI Asia Pacific Index declined as much as 4% during the trading session.
Australia’s S&P/ASX 200 slipped 1.9% to 8,901.20.
Authorities Announce Market Support Measures
South Korean authorities responded by activating emergency stabilization measures.
Officials said a market stabilization fund worth more than 100 trillion won (about $68 billion) could be deployed to support financial markets.
Analysts said the intervention signaled concern about the speed of the market decline.
Some strategists also described the selloff as a correction after the strong rally in 2025. Market conditions could stabilize if energy prices begin to ease.
