A man walks past an electronic screen displaying the Korean Standard Stock Price Index (KOSPI) at the Korea Exchange in Seoul, March 3, 2026.
Jung Young Jae | AFP | Getty Images
South Korean stocks have fallen sharply following the US and Israeli attacks on Iran. But Wall Street doesn’t see that as a harbinger of anything to come in the US.
benchmark Kospi index Stocks fell more than 12% on Wednesday, the worst single-day session ever. South Korean stocks have fallen more than 18% so far this week, marking the biggest weekly decline since 2008.
The South Korean stock market was dark on Monday due to the holiday. But it fell sharply on Tuesday after markets reopened on Tuesday in response to the Middle East conflict. South Korea imports almost all of its fossil fuels, including oil and natural gas, by tanker. According to the U.S. Energy Information Administration, about 70% of South Korea’s oil imports and up to 30% of its liquefied natural gas come from the Middle East.
KOSPI index, 5-day chart
Both the US and South Korean markets are said to be concentrated in a small number of stocks. However, US investors are quick to point out that South Korea’s concentration is much greater than in the US. Furthermore, US indexes have not seen the dramatic rise of international indexes recently.
“It’s all about perspective,” said Jay Woods, chief market strategist at Freedom Capital Markets.
concentration level
More than a third of South Korea’s index samsung electronics and SK Hynixsays Larry Tentarelli of Blue Chip Trend Report. In comparison, the world’s two largest stocks are S&P500 — Nvidia and apple — accounts for 14% of the index, he said.
Samsung Electronics has soared 216% in the past 12 months. Chipmaker SK Hynix is up 356% in the past year, even including recent declines, and both are “very up,” Tentarelli said. If Nvidia and Apple had risen as much as they did, the S&P 500 would have been up more than 40% year-to-date. Instead, the S&P 500 will remain largely unchanged in 2026.
“These numbers are definitely short-term bubble numbers, which led to a sharp correction,” Tentarelli said.
SK Hynix and Samsung Electronics both plunged more than 10% in Seoul trading on Wednesday, leading to a temporary suspension of trading on the country’s stock market, the Korea Exchange.
Despite the U.S. market being “very headline-driven” amid the U.S.-Iran war, with geopolitical developments often determining investor sentiment, Tentarelli said any changes in the index would pale in comparison to this week’s decline in the Kospi.
Woods said it would feel like “the end of the world” if the U.S. market fell 12% in one day. But such a decline is unlikely because the U.S. has broad diversification and the New York Stock Exchange and Nasdaq circuit breakers are both based on the S&P 500, Woods said.
U.S. market crashes are typically about breadth, and breadth has held up so far, especially given the context, Woods added.
Korea’s great breakthrough
Woods also said the Korean market is susceptible to a significant correction following its unusual rally.
Despite this week’s turmoil, the Kospi is still up more than 20% in 2026 alone and 100% over the past 12 months. In contrast, the S&P 500 rose slightly in 2026, rising 19% compared to a year ago.
“It’s shocking to see the index drop 12% in one of the largest countries in the world,” Woods said. But “for me, what we’re seeing in these overseas markets is that people who know the profits are big are rushing to the exits, and the selling is causing a bit of a capitulation.”
According to the International Monetary Fund, South Korea is the world’s 14th largest economy, larger than Australia, the Netherlands and Saudi Arabia.
KOSPI vs. S&P 500, 1 year
Woods said the Kospi’s behavior is similar to the recent decline in precious metals and the Peruvian market, which saw a significant decline after a monster market.
Woods acknowledged that U.S. markets have faced significant declines in recent years related to the coronavirus pandemic, soaring interest rates and inflation, and President Donald Trump’s tariffs.
But he noted that they occurred over a longer period of time than South Korea’s two-day shock. Mizuho’s trading desk told clients that Korean stocks had entered a bear market, which began “in just three days.”
Retail trader role
Part of the decline can also be explained by the prevalence of small investors in South Korea.
of iShares MSCI Korea ETF (EWY) “The company has gone from being a personal darling to a retail investor rushing out,” VandaTrack analyst Viraj Patel wrote in a note to clients.
The fund recorded a record one-month net inflow from retail investors of $266 million, eight times the previous high. The ETF set an all-time high for a trading day on Tuesday.
Speculation among domestic traders could also play a role. According to a report by Bloomberg, South Korean investors are rushing into leveraged trading to bet on the country’s market.
