Afternoon, diving in! Iran situation, latest developments! The South Korean government plans to intervene

The impact of the situation in Iran on global stock markets is still ongoing!

This afternoon, the Korean stock market once again plunged, with the decline exceeding 4%. As of the close, the KOSPI index fell 4.26% to 5052.46 points. It has now dropped 19.1% year-to-date in March, marking the largest monthly decline since October 2008. At the individual stock level, SK hynix fell by more than 7%, while Samsung Electronics fell by more than 5%. Since the February peak, the KOSPI index in South Korea has already retreated by 20%.

Sustained capital outflows from the South Korean stock market have put pressure on the Korean won. The exchange rate has seen a major plunge today. As of the time of writing, the won weakened against the U.S. dollar by 1.18% to 1 USD = 1535 won.

Some overseas media outlets said the shock stemming from the situation in Iran is severely damaging the South Korean stock market, highlighting the fragility of a market that has been supported by a small number of growth stocks. At present, bullish voices on Korean stocks are rapidly fading.

According to the latest information, the South Korean government has proposed adding 262.0 trillion won in stimulus spending to help buffer the Middle East energy shock and support economic growth.

The situation in Iran devastates the South Korean stock market

Before the outbreak of the Iran war, the South Korean stock market was among the best-performing markets in the world. Now, with oil prices surging and weighing on the outlook for this energy-dependent economy, Korean stocks have been dumped on a large scale. Meanwhile, optimism about demand for memory chips has started to cool, putting pressure on the two major heavyweight stocks, SK hynix and Samsung Electronics.

Since March, the Kospi index in South Korea has cumulatively fallen by more than 18%, the worst performance among 92 major equity indexes tracked by Bloomberg. Bloomberg noted that as of March 30, the market value of the South Korean stock market has evaporated by $739.0 billion since the beginning of the month, setting the stage for a record foreign net outflow.

“At this stage, I will not get involved in Korean stocks, mainly due to two major unfavorable factors: the situation in Iran and the memory-chip cycle.” Matthew Haupt, a fund manager at Wilson Asset Management headquartered in Sydney, said, “Uncertainty is intensifying, which significantly increases the risk of trading in the Korean stock market, especially because the related positions are already quite crowded.”

According to market-tracking data, this week, multiple U.S. retailers have seen broad-based price cuts on DDR5 memory, with the maximum reduction reaching $100 per set. On the Amazon platform, Corsair’s Vengeance (VENGEANCE) 32GB DDR5-6400 is currently priced at about $379.99, down nearly 29% from its recent peak of around $490. Outsiders believe the key driver behind this sharp drop in the memory-stick spot market appears to be the impact of Google’s newly launched TurboQuant memory-compression algorithm last week. The news quickly triggered a market repricing logic and sparked concerns in the market about a decline in memory demand. Overnight, U.S. stock memory-related shares fell sharply, with Micron Technology dropping by nearly 10%.

On Tuesday during trading hours, the Kospi index in South Korea once plunged by as much as 4%. Although the intraday decline narrowed to 1.6% at one point, it weakened again in the afternoon. The index is gradually moving toward the crucial 5000-point threshold, reflecting a rapid shift in market sentiment.

For investors, the biggest challenge is the market’s violent volatility: after sharp selloffs, there are often large rebounds, and trading halts are triggered frequently.

The circuit breaker mechanism for the Korea Kospi index will pause trading when the decline reaches 8%. In this month alone, this mechanism has already been triggered twice, accounting for one quarter of all circuit-breaker events since 2000.

Meanwhile, when the Kospi 200 futures volatility reaches or exceeds 5%, the “Sidecar” mechanism (a pause procedure for program trading during the trading session) will be triggered. Since the beginning of this year, this mechanism has been triggered 10 times, while only 3 times occurred throughout all of 2025.

Matthew Haupt said that multiple trading halts triggered in the past few weeks indicate that the market has a large amount of short-term high-frequency capital, which significantly increases the difficulty of trading.

The South Korean government steps in, proposing additional funding

According to reports by overseas media, South Korea’s Ministry of Economy and Finance announced on Tuesday that it has drafted a supplementary budget bill totaling 262.0 trillion won (about $17.26 billion), which is planned to be submitted to the South Korean National Assembly later that day for review and approval.

In a statement, South Korea’s Ministry of Economy and Finance said that because supply disruptions have pushed up oil prices, and uncertainty stemming from conflicts in the Middle East continues to intensify, the pressure on households has been rising steadily. Therefore, it is necessary to implement additional fiscal stimulus measures.

The statement said the additional spending will mainly be used to ease the burden on low-income households, small businesses, young people, and other vulnerable groups, and will also help export-oriented companies facing rising transportation and logistics costs.

The Ministry said that in the supplementary budget, the larger portion exceeding 100 trillion won will be used to support the government’s temporary price cap policy for petroleum products, as well as to issue energy consumption vouchers and provide subsidies.

The backdrop for South Korea’s launch of this new stimulus plan is that since the escalation of the Middle East conflict in late February, the disruption of major global energy transportation routes—namely the Strait of Hormuz—has driven oil prices higher, further intensifying market concerns about stagflation risk.

As a major energy importer, South Korea relies heavily on oil and natural gas coming from the Middle East. The Organisation for Economic Co-operation and Development (OECD) last week cut its forecast for South Korea’s 2026 economic growth from 2.1% to 1.7%, and raised its inflation forecast from 1.8% to 2.7%.

The Ministry said the supplementary budget will be funded using tax surpluses and national funds. No new bonds will be issued for this purpose, and it plans to use part of fiscal revenue to repay existing government debt. The Ministry expects that after repaying some debt, the government’s total debt-to-GDP ratio will decline slightly from the current 51.6% to 50.6%.

South Korea’s Ministry of Trade, Industry, and Energy said on Tuesday that it has allocated 924.1 billion won (about $609.0 million) from the supplementary budget to address energy and industrial supply-chain disruptions caused by the crisis in the Middle East.

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责任编辑：宋雅芳