Panic selling gripped South Korean markets as the Kospi Index extended its steep decline on Wednesday. Following a 7.2 per cent drop in the previous session, the index plummeted another 8.1 per cent, setting it on course for its largest two-day fall since 2008. The sell-off was led by major players such as Samsung Electronics, SK Hynix, and Hyundai Motors, which had previously fueled the market’s surge.
Trading in both Kospi and Kosdaq shares was temporarily suspended for 20 minutes after the indices fell by 8 per cent, triggering circuit breakers designed to curb excessive volatility. The market’s rapid ascent, driven by the artificial intelligence boom that saw the Kospi rise nearly 50 per cent this year at its peak, has given way to concerns about overheated equity valuations.
An Hyungjin, chief executive at Billionfold Asset Management in Seoul, noted the extreme market movements and the difficulty in making forecasts. He observed a hesitation among retail investors and a fading of bids, stating that while his firm is picking quality names and hedging, the situation does not present a clear opportunity.
Rising oil prices, exacerbated by the conflict in Iran, are adding to the market’s woes. These rising prices threaten to impact the Federal Reserve’s easing policies and pressure importers like Korea, the world’s eighth-largest crude consumer, prompting investors to reassess their equity positions.
