Anika Begay
By Jihoon Lee
SEOUL (Reuters) – South Korean shares fell on Monday, extending the sell-off into a second straight session, with a trading restriction triggered for the first time in four years, as risk appetite weakened in global financial markets on U.S. recession fears.
The benchmark fell as much as 5.9% in morning trading, after falling 3.7% on Friday, and was on track for its worst session since March 2020.
The decline, which triggered a slowdown in KOSPI collateral trading for the first time since 2020, was in line with weakness in the broader Asian market, with the MSCI Asia Pacific ex-Japan index down 2.5% and 4.6%.
Chip giants Samsung Electronics (KS:) and SK Hynix fell more than 7%, matching sharp declines in the Philadelphia Semiconductor Index, which had led Wall Street’s gains on optimism about artificial intelligence.
The KOSPI has fallen more than 11% from its six-month high of 2,860.42 reached in July.
“The market has entered extreme fear territory due to the collapse in shares of large U.S. technology companies, concerns about the slowdown in the U.S. economy and sharp declines in Asian markets,” said Kim Dae-jun, an analyst at Korea Investment Securities.
Earlier, South Korean authorities had issued several statements to calm investor sentiment, with the finance minister pledging to respond to heightened market volatility according to a contingency plan.
U.S. stock futures fell more than 1% in Asian trading on Monday, following Friday’s sharp sell-off that confirmed the Nasdaq was in correction territory.
Data released Friday showed the U.S. unemployment rate jumped to a near three-year high, raising concerns that the labor market was deteriorating and the economy was potentially vulnerable to recession.
The South Korean currency weakened on Monday after hitting a two-month high of 1,356.0 per dollar on Friday, as foreigners sold more than 1 trillion won ($735.76 million) worth of local stocks.
($1 = 1,359.1300 won)
