South Korean equities suffered a steep sell-off at the start of the week, dragging regional markets lower and triggering a temporary suspension in derivatives trading as investors reacted to global risk signals, weak sentiment, and sharp losses in precious metals.
The downturn placed Seoul at the center of a broader Asia-Pacific market retreat, with investors reassessing China’s economic momentum and adjusting positions after violent moves in gold and silver.
Kospi Suffers Heavy Losses as Trading Halted
South Korea’s benchmark KOSPI plunged more than 5% during Monday’s session, sliding to 4,949.67 as selling pressure intensified.
Futures linked to the KOSPI 200 dropped as much as 5%, prompting authorities to activate a “sidecar” mechanism. The move temporarily halted futures trading in an effort to cool market volatility.
The smaller KOSDAQ was not spared. The tech-heavy index fell 4.44%, ending the session at 1,098.36 as risk appetite evaporated.
Heavyweights Lead the Decline
Major South Korean blue-chip stocks bore the brunt of the sell-off.
Shares of Samsung Electronics fell more than 6%, while memory chip giant SK Hynix slid nearly 9%.
Losses in these two companies alone erased significant market capitalization, amplifying the downward move in benchmark indices. Analysts pointed to profit-taking, global tech weakness, and rising uncertainty around external demand.
Asia-Pacific Markets Follow Seoul Lower
The sell-off quickly spread across the region.
Japan’s Nikkei 225 declined 1.25%, while the broader TOPIX fell 0.85%.
In Hong Kong, the Hang Seng Index dropped 2.32% as mainland-linked shares weakened. China’s CSI 300 lost more than 2%, reflecting continued caution toward domestic growth prospects.
Australia’s S&P/ASX 200 also retreated, ending the day down just over 1%.
China Factory Data Offers Limited Relief
Investor attention remained fixed on China’s manufacturing outlook.
A private survey of factory activity suggested modest improvement in January, but the data failed to lift market sentiment.
The China General Manufacturing Purchasing Managers’ Index compiled by S&P Global rose to 50.3 from 50.1 in December. The reading matched market expectations and marked the strongest level since October.
While a figure above 50 signals expansion, analysts noted that the improvement reflected seasonal production increases ahead of the Lunar New Year rather than a broad-based recovery.
Investor Confidence in China Remains Fragile
Concerns over China’s longer-term outlook continue to weigh on Asian markets.
A recent survey by consulting firm Oliver Wyman found that 22% of affluent Chinese respondents held a negative view of the economy when surveyed in May.
That figure exceeded pessimism levels recorded in October 2022, shortly before Beijing began easing its strict zero-Covid policy. The findings underscore lingering doubts among high-income consumers, despite official efforts to restore confidence.
Precious Metals Extend Sharp Declines
Gold and silver prices remained under pressure following dramatic losses at the end of last week.
Spot gold fell around 6% to $4,538 per ounce after plunging nearly 10% on Friday, when prices briefly dropped below the $5,000 mark. Traders attributed the move to forced liquidations, shifting rate expectations, and profit-taking after a strong rally.
Silver prices were hit even harder. Spot silver tumbled as much as 12% to about $74.36 per ounce, intensifying volatility across commodity-linked assets.
Global Risk Sentiment Drives Sell-Off
Market strategists said the sharp moves reflected a broader reassessment of risk.
Equity investors reacted to rising uncertainty around global growth, tightening financial conditions, and abrupt swings in commodity markets. The rapid decline in South Korea highlighted how quickly sentiment can shift in highly liquid and export-sensitive markets.
With Asia’s largest economies offering mixed signals, traders remain cautious, watching for further data from China, developments in global interest rates, and stabilization in commodity prices as the week unfolds.
