Kospi Plunges Below 7,000 Amid Oil Price Surge and Tech Rout

The Kospi index plummeted more than 3% in early trading on August 24th, dropping below the 7,000 level just a day after reclaiming it. Military tensions in the Middle East escalated dramatically, sending international oil prices surging past $100 per barrel, while overnight losses on Wall Street, triggered by disappointing earnings from Alphabet and Tesla, delivered a direct blow to South Korean markets.

Foreign and institutional investors sold off holdings in tandem, with semiconductor heavyweights Samsung Electronics and SK Hynix leading the decline. The tech-heavy Kosdaq market also suffered sharp losses. The spike in oil prices reignited inflation fears, stoking concerns about further interest rate hikes and severely dampening investor sentiment.

According to the Korea Exchange, the Kospi opened at 7,000.78, down 96.11 points (1.35%) from the previous session, before rapidly extending its losses. By around 9:30 a.m., the benchmark had plunged 212.99 points (3.0%) to the 6,872 level.

Despite efforts by retail investors to defend the index with net purchases exceeding ₩720 billion ($490.7 million), the selling pressure from foreign and institutional investors was too great. Large-cap semiconductor stocks led the market lower, with Samsung Electronics slumping more than 4% and SK Hynix plunging 5.3%.

The immediate trigger for the day's sharp sell-off was the overnight weakness on Wall Street, where the Dow Jones Industrial Average fell 0.97%, the S&P 500 dropped 1.21%, and the tech-heavy Nasdaq Composite tumbled 2.15%. Disappointment over Big Tech earnings had frozen investor sentiment, with Alphabet's stock plummeting nearly 7% in after-hours trading.