South Korean markets buckled on Tuesday, with shares sliding toward their worst monthly performance since the global financial crisis and the won sinking to post-crisis lows, as the Middle East war sent investors fleeing worldwide.
The benchmark KOSPI sank 4.3% on Tuesday, taking its fall from late February's record closing high to 19.9%, a whisker short of confirming, on some measures, a bear market.
The monthly drop of 19% is the largest since 2008 and the won slumped around 1% to trade weaker than 1,500 to the dollar - levels previously broached only in the aftermath of the global financial crisis in 2009 and the late 1990s Asian crisis.
The market's earlier gains this year only deepened the rout, as soaring energy prices and fading risk tolerance left global investors with nowhere to hide, forcing a rapid unwinding of once-favoured assets.
Foreigners sold a net 35.9 trillion won ($23.5 billion) in KOSPI shares this month, exchange data shows, the largest outflow on record and one which has pushed the currency lower.
The rush out is positioning-driven, said Rajiv Batra, head of Asia and co-head of global emerging markets equity strategy at J.P. Morgan in Singapore.
"The market didn't look into how much growth damage is there, earnings damage is there ... wherever people were significantly positioned and that money was in profit, that's where people started doing de-risking."
Analysis from Goldman Sachs shows foreign selling has been heaviest in market-darling chipmakers Samsung Electronics and SK Hynix, driving foreign ownership in the pair to its lowest since 2022.
Both dropped sharply on Tuesday, shedding 5.2% and 7.6% respectively and both are down more than 20% through March. Even so, the sheer scale of the rally before the Iran war has left them sharply higher for the year, with the broader KOSPI still up about 20%.
($1 = 1,529.1100 won)
(Reporting by Jihoon Lee; Writing and additional reporting by Tom Westbrook; Editing by Shri Navaratnam)
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