Worst stock market since 9/11... 1,000 trillion won in market value wiped out in two days

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[Financial News] More than 1,000 trillion won in market capitalization was wiped out from the domestic stock market in just two days. The plunge came as the market took a direct hit from the war involving the United States of America (US), the State of Israel and the Islamic Republic of Iran. On this day, both the Korea Composite Stock Price Index (KOSPI) and the KOSDAQ market posted their largest-ever one-day declines, marking the "worst day" since the September 11 attacks in 2001.
According to the Korea Exchange (KRX) on the 4th, the combined market capitalization of the KOSPI and KOSDAQ market shrank by 1,068.6113 trillion won compared with the close on the 3rd, amid an unprecedented crash in the domestic stock market.
The steep losses were driven largely by heavy declines in top-cap stocks. Samsung Electronics alone has seen its market capitalization shrink by 262.24 trillion won so far this month. SK Hynix and Hyundai Motor Company also lost 141.8278 trillion won and 35.4231 trillion won, respectively. The combined decline in these three stocks accounts for 41.1% of the total market-cap loss.
Geopolitical risks stemming from the Middle East have intensified in the market, sharply undermining investor sentiment. Over just two trading sessions, the KOSPI plunged 18.43%, while the KOSDAQ market fell 17.97%.
On this day in particular, the domestic market set a new record for the largest-ever decline, triggering a sidecar trading curb that temporarily halted program sell orders, followed by the activation of a circuit breaker mechanism. It was the first time in a year and a half, since August 5, 2024, that circuit breakers were simultaneously triggered on both the KOSPI and KOSDAQ market.
The KOSPI closed at 5,093.54, down 698.37 points, or 12.06%, from the previous session. Both the point drop and the percentage decline were the largest on record for the index. The previous record was a 12.02% fall on September 12, 2001, right after the September 11 attacks in the US. The KOSDAQ market also tumbled, ending at 978.44, down 159.26 points, or 14.00%, from the previous trading day. Its percentage and point declines likewise set new all-time records, surpassing the previous peak drop of 11.71% on March 19, 2020, during the coronavirus disease 2019 (COVID-19) crisis.
Lee Sang-heon, an analyst at iM Securities, said, "Since yesterday, large-scale sell orders have been pouring out of exchange-traded funds (ETF) focused on large-cap stocks that had attracted strong retail inflows. This accelerated the decline in blue chips and sent the indices sharply lower." He added, "In the short term, the market may be able to form a bottom around the 5,000 level, but heightened volatility is unavoidable, so investors should exercise caution."
nodelay@fnnews.com Reporter Park Ji-yeon Reporter