South Korean markets plunged on Monday as tariff fears shake Korea once again. Renewed threats from the US government triggered a major sell-off across Korean equities.
The Kospi index opened with a steep 5 percent drop. It fell below 2,400, touching an intraday low of 2,327. This sharp fall forced the Korea Exchange to activate a sidecar at 9:12 a.m., halting futures trading for five minutes.
By early afternoon, the Kospi hovered near 2,340, marking a 5.08 percent decline. Foreign investors led the selloff, dumping 1.5 trillion won in shares. Institutions also sold off, while retail investors stepped in as buyers.
Amid the panic, the Korean won dropped 2 percent to 1,434 per dollar. Investors grew nervous about a potential global trade war, sparked by new US tariffs targeting South Korea. Over the weekend, China also announced retaliatory tariffs against the US, intensifying concerns.
Tariff fears shake Korea as market experts warn of prolonged volatility. Global recession risks and policy uncertainty could keep the market unstable.
Cho Jun-kee from SK Securities said emotional trading dominates. Valuation logic may not help for now. Fresh shocks could drag the market even lower.
South Korea’s export-heavy economy faces heightened risks. Jeong Yong-taek from IBK Securities warned that stronger tariffs will hit growth. He expects weak performance through April.
Wall Street’s plunge last week added fuel to the fire. The S&P 500 dropped 10.6 percent, while the Nasdaq lost 5.8 percent.
Still, analysts see a limit to further losses. The Kospi’s price-to-book ratio has dropped to 0.87. That level was last seen during the 2008 crash and the 2022 pandemic.
Recent political changes also impacted sentiment. The court’s decision to remove former President Yoon briefly boosted the market. Yet gains faded as tariff fears shake Korea once more.
NH Investment & Securities raised its Kospi forecast, expecting recovery with policy support. Stimulus pledges ahead of the June 3 election could lift investor mood.
Foreign investors, however, remain cautious. Persistent global volatility and a weak won discourage inflows. The currency could test 1,500 per dollar if risks stay high.
Nonetheless, clarity around trade policies may help. A stable administration could restore investor confidence. Once global tensions ease, Korea might see capital return in the second half of the year.
