Kospi Drops 4.35% Below 7,400 on Quadruple Witching Day Amid Middle East Tensions

The Kospi fell more than 4% in early trading on June 11, slipping below 7,400 on so-called quadruple witching day, when stock index and single-stock futures and options expire at the same time. Volatility surged as worries over an escalating Middle East conflict combined with a sharp drop in US technology shares, a day before the planned listing of SpaceX.

As of 9:05 a.m., the Kospi stood at 7,394.84, down 335.98 points, or 4.35%, from the previous session. The benchmark opened 2.86% lower and quickly deepened its losses to more than 4%. It was the first time the index had fallen below 7,400 during intraday trading since May 20, after 14 trading days.

On the main board, foreign investors were net sellers of 367.8 billion won, while retail and institutional investors were net buyers of 262.4 billion won and 77.6 billion won, respectively.

The selloff followed losses on Wall Street overnight. The Nasdaq dropped 1.98%, while the Dow Jones Industrial Average and the S&P 500 fell 1.87% and 1.62%, respectively. Tech shares led the decline, with Micron down 4.7% and Nvidia off 3.4%. The Philadelphia Semiconductor Index lost 3.6%.

Liquidity concerns in the technology sector also weighed on sentiment. After Alphabet unveiled a large-scale capital increase plan, Super Micro Computer tumbled 28% on news of a $7 billion stock sale.

Renewed military tensions in the Middle East added to the pressure. President Donald Trump said the US would hit Iran harder, while Iranian President Masoud Pezeshkian said Tehran would respond.

Volatility was also heightened by the simultaneous expiry of stock index and single-stock futures and options, as foreign and institutional investors moved to unwind positions and roll over funds.

All of the top 10 Kospi stocks by market capitalization were lower. Semiconductor heavyweights Samsung Electronics and SK Hynix each fell more than 4%. SK Square, Samsung Electro-Mechanics, Hyundai Motor, LG Energy Solution, Samsung Life Insurance, HD Hyundai Heavy Industries, Samsung C&T and Kia also declined.

At the same time, the Kosdaq fell 28.02 points, or 2.94%, to 923.61. The index opened down 1.52% and quickly extended its losses. In that market, foreign and institutional investors were net sellers of 14.9 billion won and 3.1 billion won, while retail investors were net buyers of 19 billion won.

Among the top 10 Kosdaq companies by market capitalization, Alteogen, Ecopro BM, Ecopro, Rainbow Robotics, Jusung Engineering, Leeno Industrial, HLB, Samchundang Pharm and Peptron fell, while Kolon TissueGene, Wonik IPS and EO Technics rose.

The won also weakened against the dollar on concern that conflict in the Middle East could widen. In Seoul foreign-exchange trading, the won opened at 1,525.5 per dollar, up 1.3 won from the previous daytime session's close.

Ko Jung-sam, Hankyung.com reporter jsk@hankyung.com