KOSPI maintains 5400 points amid Iran tensions……political instability causes investor sentiment to shrink

KOSPI South Korea’s Composite Stock Price Index plummeted on the 23rd due to the U.S. issuing a tough final ultimatum to Iran, barely staying above 5,400 points. Since the beginning of the year, global economic uncertainty has persisted, and political tensions have further escalated, spreading market panic.

U.S. President Donald Trump recently demanded Iran open the Strait permanently within 48 hours, or face attacks on Iran’s major power plants. Iran responded by saying it would further strengthen the blockade of the strait, leading to heightened market uncertainty. The KOSPI closed at 5,405.75 points, down 375.45 points from the previous trading day, with the exchange rate rising to 1,517.3 won.

Foreign and institutional investors recorded large-scale net selling, significantly impacting both the main board and KOSDAQ markets. Especially, institutional investors’ massive sell-off reached a record high. However, analysts noted that individual investors seized the opportunity to buy on dips, recording large-scale net purchases, which barely prevented a market crash.

Although authorities have taken measures to stabilize the financial market, the overall market remains unstable in the short term due to external factors. If the Middle East conflict becomes prolonged, it could exacerbate high oil prices and inflation trends. This is likely to further dampen investor sentiment and negatively impact various economic indicators.

This situation further reinforces the central bank’s hawkish stance. As expectations for rate cuts this year narrow, government bond yields have risen. It is expected that the financial markets will largely be influenced by the Middle East situation in the future. Experts worry that it may take a considerable amount of time for the market to return to calm.