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Kospi plummets below 4,000-mark on ominous signs in U.S.

Published: 18 Nov. 2025, 19:23 Updated: 18 Nov. 2025, 20:00

JIN MIN-JI
[email protected]

Electronic displays show market close at Hana Bank in central Seoul on Tuesday. [NEWS1]

The Kospi plummeted more than 3 percent on Tuesday, retreating below the 4,000 mark as a U.S. Federal Reserve official signaled a slower pace of rate cuts and investors grew cautious ahead of U.S. economic data releases delayed by the government shutdown.

It was the first time the benchmark index closed below the threshold since Nov. 7, dropping 3.32 percent to 3,953.62. The mass selling was led by institutions and foreigners, which sold a net 676.82 billion won ($462 million) and 550.22 billion won worth of shares, respectively. Kosdaq plunged 2.66 percent.

Market bellwether Samsung Electronics closed down 2.78 percent to 97,800 won, while fellow chip giant SK hynix dropped 5.94 percent to 570,000 won.

Automaker Hyundai Motor also retreated 2.58 percent to 264,500 won, while its sister Kia slid 2.47 percent to 114,500 won. Nuclear power plant manufacturer Doosan Enerbility shed 4.31 percent to 75,400 won, and defense giant Hanwha Aerospace fell 5.92 percent to 921,000 won.

“Investor sentiment has been shattered,” said Park Ki-hoon, an analyst at Korea Investment & Securities. “U.S. AI tech stocks have weakened, and monetary policy uncertainty in the United States has pushed the situation in a negative direction, strengthening the dollar."

Fed Vice Chair Philip Jefferson said on Friday that the U.S. central bank needs to “proceed slowly” with any further interest rate cuts, adding that the central bank's policy is still somewhat restrictive.

Higher interest rates mean companies pay more to borrow funds, lowering their earnings expectations.

“Risk-off sentiment has also intensified ahead of the release of the FOMC minutes and the jobs report.”

The Federal Reserve’s minutes for the October meeting, in which the central bank lowered the rates by 25 basis points to a range of 3.75 to 4 percent, will be published on Wednesday. The jobs data for September — delayed due to the U.S. government shutdown — will also be released on Thursday.

Uncertainty in the market was elevated as major investors unloaded shares of tech giants.

The hedge fund of billionaire PayPal co-founder Peter Thiel, Thiel Macro, liquidated all 537,742 Nvidia shares at the end of September. Japan’s SoftBank Group also sold its Nvidia stake in October for $5.83 billion to finance other AI ventures.

“The recent fluctuations in the market were influenced more by concerns over valuation than by fundamental factors,” said Kang Jin-hyeok, a market analyst at Shinhan Securities, in a report on Tuesday. “The market likely requires time to process the gains accumulated over the past two months.”

kospi

Markets across various sectors have shown volatility recently after weeks of steep gains.

Bitcoin dipped more than 6 percent on Coinbase on Tuesday from the previous day to trade below $90,000, while the won has weakened against the dollar to a point where Korea’s financial authorities had to make a verbal intervention.

Seoul intervened as the won depreciated to nearly 1,475 per dollar on Friday, the weakest level in seven months. It has since recovered with the won quoted at 1,465.3 against the greenback at 3:30 p.m. on Tuesday.

But Korea’s real effective exchange rate — a measure of the won’s value against a basket of major currencies — weakened to a level lower than when the won plunged to around 1,480 per dollar during Korea’s December martial law crisis, data from the Bank for International Settlements showed.

In September, the rate stood at 90.57 with an index basis of 2020 compared to 90.97 in December, when now-ousted President Yoon Suk Yeol caused economic uncertainty by declaring martial law. Compared annually, the figure was lower than the pandemic in 2022 at 94.88 and was the lowest since the 2009 aftermath of the global financial crisis at 86.96.

“Most of the factors driving the weak won are unlikely to ease in the short term, making it increasingly likely that the rate will remain stuck in the 1,400 won range,” said Lee Jin-kyung, an economist at Shinhan Investment, in a Monday report.

“In particular, the prominence of factors weakening the won, compared to the limited factors supporting its strength, is keeping the rate at a high level,” Lee added, citing trade uncertainties and capital outflows from domestic investors’ overseas investments.

BY JIN MIN-JI [[email protected]]