South Korea's capital market experienced a massive shock in Monday's trading (13/7). The benchmark KOSPI index closed down drastically by 8.95% or corrected by 669.01 points, ending at the 6,806.93 level. This sharp decline was triggered by an accumulation of negative sentiment stemming from heating geopolitical tensions in the Middle East and investor concerns regarding the future growth of the technology industry.
The situation on the trading floor triggered mass panic, forcing market authorities to activate the circuit breaker mechanism for 20 minutes to curb the increasingly massive sell-off. Previously, a sidecar mechanism was also implemented after KOSPI futures contracts recorded fluctuations exceeding the safe threshold. The KOSDAQ index was also not spared from pressure, recording a decline of 4.55% to the 799.36 level.
Tensions between the United States and Iran became the main catalyst for this decline, especially following threats of a blockade in the Strait of Hormuz. This condition worsened global market sentiment, which was already worried about profit saturation in the semiconductor sector. Although Samsung Electronics had recorded record profits in the second quarter, that positive sentiment failed to withstand the onslaught of selling by foreign and institutional investors.
The impact of this decline was clearly visible in the performance of giant issuers. Samsung Electronics shares fell sharply by 10.70%, while SK hynix recorded a deeper decline of 15.37%. On the other hand, the won exchange rate against the US dollar was also pressured to 1,503.4 won per US dollar, reflecting the economic uncertainty still hovering over the region.
