South Korea's benchmark Korea Composite Stock Price Index (KOSPI) plunged 392.53 points, or 5.25 percent, to 7,083.41 as of 11:20 am on Monday, 13 July, as fresh US-Iran military exchanges over control of the Strait of Hormuz rattled investor sentiment in Seoul. The index had already opened 0.85 percent lower before extending its losses sharply, bucking a positive close on Wall Street the previous session.

What Triggered the Sell-Off

The immediate catalyst was a sharp escalation in Middle East tensions. On Sunday (US time), the US military launched strikes against Iran in retaliation for Iranian drone attacks on US allies in the region. The two sides then exchanged fresh strikes over the contested status of the Strait of Hormuz — a critical global oil transit chokepoint — sending shockwaves through Asian markets.

South Korea's bourse operator activated a sell-side sidecar for the KOSPI after the index tumbled sharply, a circuit-breaker mechanism triggered when selling pressure becomes extreme. Institutions and foreign investors offloaded a net 501.77 billion won (approximately US$333 million) and 906.28 billion won worth of stocks, respectively. Individual investors stepped in as buyers, absorbing a net 1.38 trillion won in stocks.

Tech and Chipmakers Lead Losses

Technology stocks bore the brunt of the decline. Market bellwether Samsung Electronics fell 5.09 percent, while its chipmaking rival SK hynix plunged 9.08 percent — a particularly sharp reversal given that SK hynix had just completed a multibillion-dollar American depositary receipt (ADR) offering on the Nasdaq, with its ADRs closing at US$168 each, well above the offering price of US$149.

Flag carrier Korean Air declined 2.24 percent, and defence conglomerate Hanwha Aerospace shed 1.65 percent. Among the few gainers, top automaker Hyundai Motor edged up 0.22 percent, while Hyundai Steel climbed 4.09 percent, likely buoyed by defence and infrastructure demand expectations.

Won Weakens Against the Dollar

The Korean won weakened to 1,505.35 won per US dollar as of 11:20 am, down 6.85 won from the previous session's close. A weaker won compounds import costs — particularly for energy — at a time when oil supply disruption fears from the Hormuz standoff are already elevated.

Wall Street Context and What Comes Next

The Seoul sell-off came despite a positive Friday session in the United States, where the Dow Jones Industrial Average gained 0.29 percent and the tech-heavy Nasdaq Composite also climbed 0.29 percent, partly lifted by SK hynix's ADR debut. The divergence underscores how geopolitical risk is now overriding earnings-season optimism in Asian markets.

Analysts will be watching whether the US-Iran situation stabilises or escalates further around the Strait of Hormuz, as any sustained disruption to oil flows through the waterway — which handles roughly 20 percent of global oil trade — could trigger a broader regional and commodity-market shock. South Korean markets, heavily reliant on imported energy and exposed to global tech demand cycles, remain particularly vulnerable to both channels of risk.