Korean stock market plummets triggering a circuit breaker, Taiwan stocks fall over 1,000 points, TSMC drops below 1900 yuan

South Korean stock markets have recently experienced significant volatility, with the KOSPI index dropping sharply for two consecutive trading days, marking the largest single-day decline since 2008. Due to the excessive short-term decline, trading was temporarily halted at one point, indicating that short-term options volatility is at a multi-year high. Taiwan’s stock market was also affected, with TSMC directly falling below 1,900 TWD, and the weighted index dropping 1,200 points, a decline of over 3.5%.

South Korean stock markets fall for two days in a row, triggering circuit breakers

Affected by tensions in the Middle East, the South Korean KOSPI index experienced a sharp decline over two consecutive trading days, approaching the largest two-day drop since 2008. Both the Korea Composite Stock Price Index (KOSPI) and the Korea Securities Dealers Automated Quotations (KOSDAQ) fell by 8% today, triggering circuit breakers and suspending trading for 20 minutes.

The recent pullback in South Korea’s stock market was mainly led by large-cap stocks such as Samsung Electronics and SK Hynix. These companies previously benefited from the AI boom and corporate reforms, leading the market to nearly a 50% increase. However, as global risk appetite weakens and funds withdraw from high-liquidity, high-valuation targets, foreign net selling indicates institutional investors are adjusting their asset allocations, causing the South Korean volatility index to soar to its highest level since 2020.

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Macroeconomic and geopolitical dual impacts

From a macroeconomic perspective, the surge in international oil prices triggered by Middle East conflicts is a core factor changing market expectations. As the eighth-largest oil consumer globally, South Korea faces rising energy costs that increase corporate expenses and exacerbate domestic inflation pressures. Additionally, rising oil prices raise concerns that the Federal Reserve’s monetary easing may be delayed. Amid inflation expectations and interest rate uncertainties, investors are reassessing market prospects, leading to rapid capital withdrawal and position unwinding.

Despite the overall market decline, there are notable sector differences. Benefiting from geopolitical instability, the defense and military industry has become one of the few sectors to rise against the trend, with some companies’ stock prices increasing by over 25%. This reflects that, in the face of systemic risks, funds are shifting toward defensive industries. Shipbuilding and defense sectors are likely to continue being beneficiaries of global supply chain restructuring and geopolitical strategies.

Taiwan stocks plunge over 1,000 points, TSMC falls below 1,900 TWD

Taiwan’s stock market was also impacted. TSMC (2330) opened below 1,900 TWD, reaching a low of 1,880 TWD. The Taiwan Weighted Index dropped over 1,200 points, down more than 3.5%, led by TSMC’s decline. Electronics, traditional industries, and financial stocks all fell sharply, with only shipping, oil and electricity, and electronics retail sectors showing some gains.

The weighted index broke below the 5-day and 10-day moving averages, indicating a clear shift to a more cautious market sentiment.

This article about the Korean stock market’s plunge triggering circuit breakers, Taiwan stocks falling over 1,000 points, and TSMC dropping below 1,900 TWD was first published on Lian News ABMedia.