The sharp sell-off triggered circuit breakers at 1:31 a.m. GMT, halting trading for 20 minutes. Earlier in the morning, a "sidecar" mechanism had already been activated in an attempt to curb program-driven selling.
This is the third time such measures have been triggered since the start of March. The mechanism is designed to limit panic selling and stabilize a market gripped by extreme volatility.
Big technology stocks, which dominate the index, were hit particularly badly. Samsung Electronics fell by about 7.9%, while SK Hynix, another global semiconductor giant, slid by over 8%, contributing heavily to the broader market slump.
Volatility that is here to stay
Monday's drop is the latest in a string of turbulent sessions for the Seoul stock market. Last Wednesday, the KOSPI posted the steepest one-day fall in its history, plunging by more than 12% in a single session. In just a few days, hundreds of billions of dollars in market value were wiped out, while the South Korean won fell to its lowest level against the dollar in 17 years, breaking through the 1,500-won mark.
A sharp reversal after a historic rally
The correction comes after a particularly strong period for South Korean equities. In recent months, the KOSPI had been buoyed by the global boom in artificial intelligence and strong demand for electronic chips, of which South Korea is a leading producer. Riding that momentum, the index hit a record high in late February 2026 at around 6,300 points, supported by the performance of the country's tech giants. Before the outbreak of hostilities in Iran, the index was posting an exceptional gain, jumping by nearly 50% in just eight months.
Set against a backdrop of geopolitical tensions
The KOSPI's plunge comes amid heightened geopolitical tensions in the Middle East. The conflict has pushed energy prices to new highs, with oil climbing above $100 a barrel. Threats to the Strait of Hormuz, through which 20% of the world's crude oil passes, are of particular concern in Seoul.
Amid this uncertainty, investors have sharply reduced exposure to risk assets and moved into safe havens, notably the US dollar, adding to pressure on Asian equity markets. South Korea, a major importer of hydrocarbons, fears a surge in inflation that would derail its growth momentum.
Emergency measures under consideration
In response, South Korean authorities said they are considering several stabilization measures, including a temporary cap on fuel prices and support for financial markets to limit the impact of the energy shock on the economy. Governments and central banks are now closely monitoring developments in the Middle East conflict, which could continue to fuel volatility in financial markets in the coming weeks.
