South Korea's KOSPI index crashed 12% on Wednesday, marking its largest single-day decline in history and erasing approximately $625 billion in market value. Geopolitical tensions and margin calls fueled a widespread market selloff.
The benchmark index, which tracks major companies on the Korea Exchange, closed near 5,093.54 points. Trading was halted for 20 minutes after circuit breakers were triggered by an 8% drop.
Leading the decline were major technology firms, with Samsung Electronics falling 11.7% and SK Hynix dropping 9.6%.
The sharp downturn followed a two-day decline that briefly pushed the KOSPI into bear market territory, over 20% below its recent all-time high. The rout intensified as retail investors unwound leveraged positions, with outstanding margin debt reaching $22.4 billion by late January 2026, a 25% increase from the previous year.
Brokerages initiated margin calls as prices fell, forcing investors to liquidate positions and accelerating the downward spiral.
The immediate trigger was rising geopolitical tensions, including military strikes by the United States and Israel against Iranian targets, which sharply increased crude oil prices. South Korea, heavily reliant on imported energy, is particularly vulnerable to energy price spikes, which can impact corporate margins and consumer spending.
Foreign investors had already begun reducing their exposure. In February 2026, international funds sold a record 21.14 trillion won worth of Korean equities, representing the largest monthly outflow on record.