Market Panic: 1,000 Trillion Won Wiped Out in Two Days [U.S.–Iran War]

More than 1,000 trillion won in market capitalization vanished from the domestic stock market in just two days. The plunge came as the war involving the United States of America (U.S.), Israel and the Islamic Republic of Iran (Iran) hit investor sentiment head-on. Both the Korea Composite Stock Price Index (KOSPI) and the KOSDAQ Market posted their largest-ever daily declines, marking the "worst day" since the September 11 attacks (9/11 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 after the historic crash that began on the 3rd. The steep fall was driven largely by heavy losses in top-cap stocks. Samsung Electronics alone has seen its market value drop by 262.24 trillion won so far this month. SK Hynix and Hyundai Motor also lost 141.8278 trillion won and 35.4231 trillion won, respectively. The decline in these three stocks accounts for 41.1% of the total market-cap loss.
Geopolitical risks stemming from the Middle East have surged in the market, sharply undermining investor confidence. Over just two trading sessions, the KOSPI tumbled 18.43%, while the KOSDAQ Market fell 17.97%.
On this day in particular, the domestic market set a new record for the largest intraday decline, with a sidecar trading curb triggered first, followed by the activation of a circuit breaker mechanism. It was the first time in about a year and a half, since August 5, 2024, that circuit breakers were activated simultaneously 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% plunge on September 12, 2001, immediately after the September 11 attacks. The KOSDAQ Market ended at 978.44, down 159.26 points, or 14.00%, from the prior day. Its percentage and point declines also broke previous records. The earlier worst drop was an 11.71% fall on March 19, 2020, during the outbreak of Coronavirus disease 2019 (COVID-19).
Lee Sang-heon, an analyst at iM Securities, said, "Large-scale sell orders have been pouring out of exchange-traded funds (ETF) focused on blue-chip stocks that had attracted strong retail buying, which accelerated the decline in large caps and dragged the indices sharply lower." He added, "In the short term, the market may form a bottom around the 5,000 level, but with volatility inevitably elevated, investors should exercise caution."
nodelay@fnnews.com Park Ji-yeon Reporter