By Jules Rimmer
The KOSPI’s 50% gain by the end of February has now been pared to 37%
Foreign investors have sold more than $7 billion of Korean shares in the last two trading sessions.
Closed Monday for a national holiday and briefly insulated from heavy selling elsewhere, the South Korean stock market reopened Tuesday to heavy losses.
The Kospi KR:180721, the world’s best performing equity index of 2026 succumbed to heavy profit-taking with a 7% correction, forcing the market regulators to implement a short-term suspension of program trading at one point when circuit-breakers were triggered.
Leading the falls were two of the market heavyweights, Samsung Electronics (KR:005930) and SK Hynix (KR:000660) , the world’s largest memory chips makers whose shares tumbled 9.88% and 11.5% respectively. Despite the precipitous declines Tuesday, the Korean market is still showing healthy returns of 37% year-to-date and 128% in the last twelve months but trading activity last week had indicated feverish speculation from retail traders and a degree of complacency setting into the mindset of investors.
Data released by the Korean exchange revealed that international investors were already starting to reduce exposure last week with the last trading day of February registering a net outflow of 7 trillion won ($4.7 billion) and Tuesday’s flows also showed them to be net sellers of another 5.4 trillion won, according to Bloomberg and Chosun Biz.
Tuesday’s fall represented the largest one-day drop in the benchmark index since the volatility induced by the sudden unwind of the yen carry-trade in August of 2024.
Weakness in stocks was also compounded by a drop in the Korean won (USDKRW) which fell 1.34% against the dollar DXY amid overall risk-off sentiment towards emerging market currencies and a safe-haven bid for the U.S. currency. The spike in crude prices since the U.S.-Israeli strike on Iran Saturday is also distinctly negative. South Korea ranks among the world’s largest importers of crude oil (BRN00), requiring about 2.7 million barrels daily, with around 70% of its supplies coming from the Middle East.
Themes from international markets were also played out in Seoul where shipping companies like Korea Line Corporation (KR:005880) and STX Green Logis (KR:465770), defense stocks like Hanwha Systems (KR:272210) and Lig Nex1 Co (KR:079550), and energy plays like Daesung Energy (KR:117580), were chased higher.
-Jules Rimmer
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03-03-26 0419ET
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