Concerns over a potential economic downturn fueled by the tariff policies of the Donald Trump administration have sparked panic selling in South Korea’s financial markets.
As of 9:02 a.m. on Apr. 7, the benchmark Korea Composite Stock Price Index (KOSPI) had dropped 108.14 points, or 4.39%, to 2,357.28. The KOSDAQ also declined, falling 21.97 points, or 3.2%, to 665.42.
Shares of major KOSPI-listed companies, including Samsung Electronics, SK Hynix, LG Energy Solution, Samsung Biologics, Hyundai Motor and Celltrion, were sharply lower. A similar trend was seen on the KOSDAQ, where top-cap stocks such as Alteogen, Ecopro BM, HLB, Ecopro and Rainbow Robotics also slid.
As volatility mounted, investors began sharing information about circuit breakers and sidecar mechanisms designed to prevent disorderly trading.
Circuit breakers are triggered when the KOSPI or KOSDAQ index plunges beyond certain thresholds compared to the previous session. In the first stage, if either index drops more than 8% for at least one minute, trading is halted for 20 minutes before resuming.
Sidecars apply to index futures traded on the domestic market. If the most heavily traded futures contract tied to the KOSPI 200 falls more than 5% within a minute, program trading quotes are restricted for five minutes.
The tariff shock that began on Wall Street is now spreading across global markets. On Apr. 2 local time, Trump announced a policy of “reciprocal tariffs.” In just two trading sessions, the S&P 500 index plunged more than 10%, and on Apr. 7, S&P 500 futures were down more than 4%.
With little sign that the administration plans to reconsider the tariffs anytime soon, Trump urged people to “hang tough” in a social media post, while U.S. Secretary of Commerce Howard Lutnick told the press there would be no delay in the rollout.
Seo Sang-young, an analyst at Mirae Asset Securities, said hedge funds were selling off assets to manage margin calls triggered by the sharp market declines. “Tariff measures by the Trump administration, along with retaliatory tariffs, are putting pressure on corporate earnings,” Seo said. “We expect volatility to continue for the time being.”
