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Kospi drops over 6% as Middle East crisis takes new turn with Trump's energy threat

Published: 23 Mar. 2026, 17:30

A screen in Hana Bank's trading room in central Seoul shows the Kospi closing at 5,405.75 points on March 23, down 375.45 points, or 6.49 percent, from the previous trading session. [YONHAP]

Shares plummeted over 6 percent on Monday as the Middle East crisis showed no signs of easing amid an extended standoff between the United States and Iran over the Strait of Hormuz. The Korean won fell to its lowest in 17 years against the U.S. dollar.

The Kospi fell 375.45 points, or 6.49 percent, to 5,405.75.

The index had experienced extreme volatility since the outbreak of the Iran war, falling by more than 12 percent on March 4, before a sharp rebound in the next session, only to fall again by more than 5 percent the following week.

The Kospi opened sharply lower on Monday, triggering the country's main bourse operator to temporarily halt program trading for five minutes.

It marked the sixth sell-side sidecar issued this year, according to the Korea Exchange, activating the curb on program trading after certain market indexes fluctuated beyond a designated threshold.

"Offshore and institutional investors unloaded large-cap shares amid a triple burden of high oil prices, U.S. rate uncertainties and geopolitical tensions," Lee Kyoung-min, an analyst at Daishin Securities, said.

Foreign and institutional investors sold a combined net 7.5 trillion won worth of equities ($4.9 billion), while retail investors snapped up a net 7 trillion won.

Trade volume was heavy at 1.1 billion shares worth 27 trillion won. Losers far outnumbered winners 861 to 52.

Tensions are escalating between Iran and the United States after President Trump gave Tehran 48 hours to reopen the Hormuz Strait or face the destruction of its energy infrastructure.

In return, Iran warned it could "indefinitely" close the strait if Trump acted on his threat.

Growing Middle East tensions, coupled with waning expectations that the U.S. Federal Reserve will cut rates soon, added further selling pressure on large-cap shares in chips, defense and finance, key sectors that have led the bull market, Lee added.

Market top-cap Samsung Electronics fell 6.57 percent to 186,300 won, while its chipmaking rival SK hynix retreated 7.35 percent to 933,000 won.

Top car maker Hyundai Motor moved down 6.19 percent to 485,000 won, defense giant Hanwha Aerospace dipped 3.18 percent to 1,278,000 won, and major financial group KB Financial lost 6.38 percent to 145,300 won.

Korea's major shippers lost ground, as investors went to lock in profits, despite expectations that revenues may increase due to a rise in freight rates.

HMM declined 6.78 percent to 19,810 won and Hyundai Glovis moved down 6.29 percent to 216,000 won.

The local currency depreciated 16.7 won from the previous session to trade at 1,517.3 won against the greenback at 3:30 p.m.

The won hit a fresh low in the 17 years since March 9, 2009, when it hit 1,549 during the global financial crisis.

Bond prices, which move inversely to yields, closed sharply lower. The yield on three-year Treasurys rose 20.7 basis points to 3.617 percent, and the return on the benchmark five-year government bonds added 21.6 basis points to 3.837 percent.

Yonhap