KOSPI Index in South Korea fell 3% amid market pressure

KOSPI Index in South Korea fell 3% amid market pressure

South Korea’s KOSPI Index fell 3% on March 5, 2026, extending its decline amid heightened geopolitical tensions and market volatility. The index had previously recorded its worst single-day drop in history, plummeting 12% on March 3, driven by escalating fears of a prolonged U.S.-Iran conflict and its impact on global energy supplies. The selloff followed a 7.24% decline on March 2, marking one of the sharpest corrections in the benchmark’s history. Analysts attribute the turmoil to South Korea’s vulnerability to oil price shocks, as the country imports nearly all its fossil fuels, with 70% of crude oil and 30% of liquefied natural gas sourced from the Middle East.

The crisis intensified after Iran’s Revolutionary Guard claimed to have closed the Strait of Hormuz, a critical oil transit route, while U.S. President Donald Trump vowed to ensure the “free flow of energy” through the region. Oil prices surged, with Brent crude rising 5.43% to $81.96 per barrel, exacerbating concerns over inflation and economic disruption. South Korea’s market, already overextended after a 50% rally in 2025, faced additional pressure from leveraged retail investors and margin debt-driven forced liquidations.

Global markets also reacted, with Japan’s Nikkei 225 down 1.59%, Australia’s S&P/ASX 200 falling 1.81%, and U.S. indices like the S&P 500 and Nasdaq recording modest declines. However, U.S. markets showed relative resilience, with analysts noting structural differences in diversification and risk exposure. South Korea’s government has pledged to use a 100 trillion won stabilization program to mitigate volatility, while investors remain cautious ahead of China’s National People’s Congress, where key economic targets will be announced. The KOSPI, though down 18% for the week, remains up 21% year-to-date, reflecting lingering uncertainty amid macroeconomic headwinds.