South Korean shares plunge to 17-month low as US tariff worries dominate

The benchmark KOSPI closed down 137.22 points, or 5.57%, at 2,328.20, marking its biggest daily percentage fall since August 5, 2024 and the lowest level since November 1, 2023.

Seoul: South Korean shares plunged on Monday to their lowest level in more than 17 months, activating a trading curb, as US tariff worries strike global financial markets.

The benchmark KOSPI closed down 137.22 points, or 5.57 per cent, at 2,328.20, marking its biggest daily percentage fall since August 5, 2024 and the lowest level since November 1, 2023.

A sidecar trading curb was activated on the KOSPI soon after the market opened, halting programme trading for five minutes, for the first time in eight months.

In broader Asia, MSCI's broadest index of Asia-Pacific shares outside Japan fell nearly 8 per cent to head for its biggest drop since 2008, as Hong Kong shares dropped 12 per cent and Taiwanese markets fell 10 per cent, and China shed over 8 per cent.

Japan's Nikkei declined more than 6 per cent, as US stock futures extended losses after Wall Street's heavy two-day sell-off as US President Donald Trump's reciprocal tariffs stoke recession fears.

South Korea will prepare support measures for sectors with urgent needs, the finance minister said on Monday, ahead of Trump's 25per cent tariff, which is planned to be imposed on imports from the United States' Asian ally starting Wednesday.

The country's financial regulator said it would be prepared to activate its 100 trillion-won ($68.17 billion) market stabilising programme, while the central bank also vowed to stabilise markets.

"Volatility will continue to remain elevated as Trump's tariffs and retaliatory measures from other countries are adversely affecting corporate earnings," said Seo Sang-young, an analyst at Mirae Asset Securities.

Among South Korean heavyweights, chipmaker Samsung Electronics fell 5 per cent, while peer SK Hynix plunged 10 per cent to a five-month low.

Hyundai Motor shed 7 per cent to the lowest since November 2023 and sister automaker Kia Corp lost 6 per cent. Battery makers, steel manufacturers and biopharmaceutical companies also fell sharply.

Foreigners sold local shares worth 2.1 trillion won, the biggest since August 13, 2021. Pension funds, including the state-run National Pension Service (NPS), bought shares worth 430 billion won, the biggest in more than three years.

The won was quoted at 1,467.8 per dollar, down 0.5 per centfrom the previous close and 2.6 per cent from a five-week high hit on Friday when a court ruling upholding the impeachment of President Yoon Suk Yeol reduced political risk.

The country's foreign exchange authorities were suspected of selling dollars in the currency market to curb declines in the local currency, according to traders.

On Monday, the spread on five-year credit default swaps widened to 50.17 points, sharply up from 40.84 on Friday, the highest since January 2023 and the biggest jump since March 2020. Such swaps offer insurance against the risk of default.

The most liquid three-year Korean treasury bond yield fell by 6.9 basis points to 2.405 per cent, while the benchmark 10-year yield fell by 7.9 basis points to 2.661 per cent, hitting their lowest since March 2022 and December 2024, respectively.