South Korean shares opened sharply lower on Monday as renewed selling in semiconductor companies and escalating military tensions between the United States and Iran drove investors away from riskier assets. The benchmark Korea Composite Stock Price Index fell 177.02 points, or 2.6%, at the opening bell to 6,643.58.
Semiconductors lead the retreat
Technology shares came under immediate pressure after another weak session for US chipmakers on Friday. Concerns that investment in artificial intelligence has moved ahead of sustainable earnings continued to weigh on valuations across the global semiconductor industry.
Sandisk and Micron both fell by more than 8% on Wall Street, creating a difficult backdrop for South Korea’s semiconductor-heavy market. Samsung Electronics declined in early trading, while persistent volatility surrounding SK Hynix further undermined confidence.
South Korean technology companies had delivered substantial gains during the earlier AI rally, leaving the sector particularly exposed as investors reassessed growth assumptions and reduced highly concentrated positions.
Middle East conflict raises costs
The deteriorating security situation in the Middle East added another layer of pressure. Further exchanges between US and Iranian forces over the weekend increased concerns that energy supplies and tanker movements could face additional disruption.
Brent crude climbed above $90 a barrel as traders assessed the threat to shipments through the Strait of Hormuz. Higher oil prices are especially challenging for South Korea, which imports most of its energy and remains sensitive to changes in global fuel costs.
The increase also reinforced fears that inflation could remain elevated, potentially limiting the ability of central banks to support economic growth. South Korea’s central bank recently increased its benchmark interest rate to 2.75%, beginning a new tightening phase at a time of heightened market volatility.
Losses extend beyond technology
Selling spread into other parts of the market as investors reduced exposure to economically sensitive companies. Hyundai Motor, Kia and KB Financial Group were among the notable early decliners, showing that the weakness was not limited to chipmakers.
Samsung Biologics attracted separate attention after agreeing to acquire Switzerland’s PolyPeptide Group in a $1.8 billion cash transaction. The deal, described as the largest acquisition in South Korea’s biopharmaceutical industry, will expand the company’s peptide manufacturing and global contract production capabilities.
However, the announcement was insufficient to counter the broader risk-off mood. The Kospi extended its decline during the morning and moved towards its lowest level since late April.
Volatility remains elevated
Monday’s opening followed several weeks of extreme fluctuations in Seoul. The Kospi reached a record in June but subsequently entered a severe correction as investors questioned the sustainability of elevated AI-related valuations.
The speed of the retreat has made South Korea one of Asia’s most volatile major markets. Its heavy exposure to semiconductors provided strong returns during the technology boom but is now amplifying losses as global investors rotate away from the sector.
With oil prices rising and the conflict involving Iran showing no clear sign of de-escalation, traders are likely to remain cautious. Semiconductor movements, foreign investor flows and developments in the Middle East will determine whether Seoul can stabilise during the remainder of Monday’s session.
Newshub Editorial in Asia – 20 July 2026
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