South Korean shares tumbled on Wednesday as rising bond yields in the US and Asia, along with heightened geopolitical uncertainty in the Middle East, intensified selling in semiconductor stocks, according to a report by Reuters.
The benchmark Kospi fell 319.75 points, or 4.65%, to 6,550.08 as of 0142 GMT. Foreign investors were net sellers of shares worth 1.47 trillion won, while 742 of the 905 traded stocks declined.
Chipmakers led the selloff, with Samsung Electronics falling 6.33% and SK Hynix losing 7.34%. Hyundai Motor declined 4.37% and Kia Corp dropped 3.57%. POSCO Holdings fell 2.16%, while Samsung BioLogics shed 0.65%. In contrast, LG Energy Solution gained 1%.
The decline came as long-term borrowing costs in major economies, including the US, Germany and Japan, climbed to multi-decade highs on Tuesday. Reuters reported that ballooning government debt and geopolitical concerns have pushed borrowing costs higher, creating additional pressure on companies and households while complicating central bank policy.
Geopolitical tensions also weighed on sentiment. The report by Reuters on Monday stated that Iran was preparing to shift to a fully offensive military posture after efforts to negotiate a permanent end to its conflict with the US stalled, while Washington ruled out extending a temporary ceasefire agreement.
South Korean markets were also assessing reports that planned joint US-South Korean military drills could be reduced by about half following US President Donald Trump's order to substantially cut US participation in the annual exercises.
The Korean won strengthened 2.2% against the dollar so far this year, while the KOSPI remains up 55.43% in 2026 despite Wednesday's sharp decline.
In the bond market, September futures on three-year Treasury bonds were unchanged at 103.13. The yield on the most liquid three-year Korean Treasury bond rose 1.4 basis points to 3.855%, while the benchmark 10-year yield increased 0.7 basis points to 4.382%.
