South Korean shares plunge to 17-month low as US tariff worries dominate (updated)

Kakao

07/04/2025 08:28

KOSPI hits 17-month low on US tariff worries

Trading curb activated for first time in 8 months

Authorities vow to support firms, stabilise markets

CDS premium rises to highest in more than 2 years

Updates with market close

By Jihoon Lee

SEOUL, April 7 (Reuters) - South Korean shares plunged on Monday to their lowest level in more than 17 months, activating a trading curb, as U.S. tariff worries strike global financial markets.

The benchmark KOSPI .KS11 closed down 137.22 points, or 5.57%, at 2,328.20, marking its biggest daily percentage fall since August 5, 2024 and the lowest level since November 1, 2023.

A sidecar trading curb was activated on the KOSPI soon after the market opened, halting programme trading for five minutes, for the first time in eight months.

In broader Asia, MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS fell nearly 8% to head for its biggest drop since 2008, as Hong Kong shares dropped 12% and Taiwanese markets fell 10%, and China shed over 8%.

Japan's Nikkei .N225 declined more than 6%, as U.S. stock futures extended losses after Wall Street's heavy two-day sell-off as U.S. President Donald Trump's reciprocal tariffs stoke recession fears.

     South Korea will prepare support measures for sectors with urgent needs, the finance minister said on Monday, ahead of Trump's 25% tariff, which is planned to be imposed on imports from the United States' Asian ally starting Wednesday.

The country's financial regulator said it would be prepared to activate its 100 trillion-won ($68.17 billion) market stabilising programme, while the central bank also vowed to stabilise markets.

"Volatility will continue to remain elevated as Trump's tariffs and retaliatory measures from other countries are adversely affecting corporate earnings," said Seo Sang-young, an analyst at Mirae Asset Securities.

Among South Korean heavyweights, chipmaker Samsung Electronics 005930.KS fell 5%, while peer SK Hynix 000660.KS plunged 10% to a five-month low.

Hyundai Motor 005380.KS shed 7% to the lowest since November 2023 and sister automaker Kia Corp 000270.KS lost 6%. Battery makers, steel manufacturers and biopharmaceutical companies also fell sharply.

Foreigners sold local shares worth 2.1 trillion won, the biggest since August 13, 2021. Pension funds, including the state-run National Pension Service (NPS), bought shares worth 430 billion won, the biggest in more than three years.

The won KRW=KFTC was quoted at 1,467.8 per dollar, down 0.5% from the previous close and 2.6% from a five-week high hit on Friday when a court ruling upholding the impeachment of President Yoon Suk Yeol reduced political risk.

The country's foreign exchange authorities were suspected of selling dollars in the currency market to curb declines in the local currency, according to traders.

On Monday, the spread on five-year credit default swaps KRGV5YUSAC=MG widened to 50.17 points, sharply up from 40.84 on Friday, the highest since January 2023 and the biggest jump since March 2020. Such swaps offer insurance against the risk of default.

The most liquid three-year Korean treasury bond yield KR3YT=RR fell by 6.9 basis points to 2.405%, while the benchmark 10-year yield KR10YT=RR fell by 7.9 basis points to 2.661%, hitting their lowest since March 2022 and December 2024, respectively.

($1 = 1,467.0000 won)

 (Reporting by Jihoon Lee, Additional Reporting by Yena Park; Editing by Gerry Doyle)

 ((jihoon.lee@thomsonreuters.com;))