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Kospi nose-dives 7% as Iran conflict threatens oil supply chain

Published: 03 Mar. 2026, 17:42 Updated: 03 Mar. 2026, 17:56

KIM JU-YEON
[email protected]

A screen in Hana Bank's trading room in central Seoul shows the Kospi closing at 5,791.91, down 452.22, or 7.24 percent, from the previous session. [YONHAP]

Shares fell more than 7 percent on Tuesday, closing below the 5,800 mark as escalating Middle East tensions dented investor sentiment, while the won lost sharply against the dollar to a one-month low.

The benchmark Kospi tumbled 452.22 points, or 7.24 percent, to close at 5,791.91, marking the lowest closing price since Feb. 20, when the index finished at 5,808.53.

The secondary Kosdaq slid 55.08 points, or 4.62 percent, to 1,137.70.

The country's main bourse operator, the Korea Exchange, issued a sell-side sidecar for 5 minutes around noon, suspending the selling of Kospi futures.

Trade volume was heavy at 1.2 billion shares worth 52.5 trillion won ($35.8 billion). Losers sharply outnumbered winners 840 to 73.

Foreign and institutional investors led the daily sell-off, dumping a net 5.1 trillion won and 891.1 billion won, respectively. Retail investors, on the other hand, went bargain hunting and snapped up a net 5.8 trillion won.

The Kospi 200 Volatility Index, a gauge of investor anxiety, jumped to 60.72 at one point, its highest since March 24, 2020.

Coordinated U.S. and Israeli airstrikes on Iran over the weekend roiled global markets from the start of this week, but the Korean market closed on Monday in observance of the March 1 Independence Movement Day holiday.

"The main index experienced expanded volatility as the Middle East risk was realized after a long weekend," Roh Dong-gil, an analyst at Shinhan Securities, said. "The stock market is expected to be affected by oil prices and interest rates as the situation develops."

Oil prices extended gains on Tuesday after surging the previous day, as attacks on ships near the Strait of Hormuz heightened supply concerns. Iranian state media has warned vessels against crossing the narrow waterway, through which about 20 percent of the world’s oil and gas passes.

Continued strength in oil prices could affect inflation and the monetary policy outlook, adding to overall market volatility.

Samsung Electronics and SK hynix share prices are displayed at a screen in Hana Bank's trading room in central Seoul on March 3. [YONHAP]

Most Seoul shares closed down.

Market bellwether Samsung Electronics tumbled 9.88 percent to 195,100 won, and its chipmaking rival SK hynix plummeted 11.5 percent to 939,000 won.

Top automaker Hyundai Motor dived 11.72 percent to 595,000 won, and leading battery maker LG Energy Solution sank 7.96 percent to 393,000 won.

Travel shares were among the biggest losers as flag air carrier Korean Air nose-dived 10.32 percent to 25,200 won and major travel agency Hana Tour Service lost 6.65 percent to 44,900 won.

KB Financial Group, a leading banking group, fell 3.46 percent to 153,500 won, and Celltrion, a major pharmaceutical firm, dropped 5.66 percent to 225,000 won.

However, oil refinery and defense shares were bullish.

Leading refinery firm SK Innovation rose 2.51 percent to 130,900 won, and S-Oil, whose largest shareholder is Saudi Aramco, shot up 28.45 percent to 141,300 won.

Defense giant Hanwha Aerospace soared 19.83 percent to 1.43 million won, and LIG Nex1 surged 29.86 percent to 661,000 won.

The local currency depreciated 26.4 won from the previous session's close to trade at 1,466.1 against the dollar at 3:30 p.m., hitting its weakest level since Feb. 6, when it closed at 1,469.5 won.

Bond prices, which move inversely to yields, closed lower. The yield on three-year Treasurys rose 13.5 basis points to 3.18 percent, and the return on the benchmark five-year government bonds increased 8.8 basis points to 4.04 percent.

BY KIM JU-YEON, YONHAP [[email protected]]