The KOSPI closed at the 8,630 level amid massive foreign selling. The decline is attributed to profit-taking centered on recently surging large-cap semiconductor stocks, as the prolonged military conflict between the United States and Iran pushed up international oil prices and U.S. interest rate concerns mounted. However, the drop was partly limited as sector rotation spread to relatively neglected sectors such as finance, retail, and chemicals.
According to the Korea Exchange on the 4th, the KOSPI finished at 8,639.41, down 162.08 points, or 1.84%, from the previous session. After opening at 8,623.82, the KOSPI narrowed its losses during the day and rose as high as 8,759.05, but failed to reclaim the 8,700 level amid continued foreign selling.
In the stock market that day, foreigners net sold 6.988 trillion won. This was the second-largest amount on record, following net selling of 7.0812 trillion won on February 27, 2026. Foreigners extended their net selling streak to 19 consecutive trading days since May. Individuals net bought 5.0114 trillion won, while institutions net bought 1.8153 trillion won.
The exchange rate also weighed on foreign fund flows. In the Seoul foreign exchange market that day, the won-dollar exchange rate ended daytime trading at 1,529.7 won, up 13.3 won from the previous session. The rate opened at 1,530 won for the first time in about 17 years since March 2009, during the global financial crisis.
Top market-cap stocks were mostly weak. Samsung Electronics (005930) fell 2.50%, and SK hynix (000660) declined 2.63%. Samsung Electro-Mechanics (009150) (-5.35%), LG Energy Solution (373220) (-4.63%), Hyundai Motor (005380) (-3.98%), and HD Hyundai Heavy Industries (329180) (-3.27%) also fell. In contrast, SK Square (402340) rose 1.11%, and Samsung C&T (028260) gained 10.20%.
The KOSPI's weakness is attributed to the combined effects of geopolitical risk from the Middle East and U.S. interest rate concerns. Analysts say it was the result of Iran launching missile and drone attacks on Kuwait International Airport, raising military tensions in the Middle East, and West Texas Intermediate (WTI) crude again surpassing $95. The U.S. May Institute for Supply Management (ISM) services purchasing managers' index (PMI) and ADP private employment came in stronger than expected, pushing the 2-year U.S. Treasury yield above 4.0% and the 10-year yield close to 4.5%.
By sector, there was also a trend of easing concentration in leading stocks. Financial stocks rose on bargain hunting, including KB Financial (105560) (4.85%), Shinhan Financial Group (055550) (3.84%), Korea Investment Holdings (071050) (3.73%), and Samsung Securities (016360) (5.06%). Department store stocks such as Shinsegae (004170) (15.29%), Hyundai Department Store (069960) (12.32%), and Lotte Shopping (023530) (11.55%) gained, reflecting expectations for domestic consumption and growth in sales to foreign tourists. Refining and chemical stocks also strengthened on rising international oil prices and sector rotation.
The KOSDAQ rebounded. The KOSDAQ index closed at 1,049.73, up 23.70 points, or 2.31%, from the previous session. In the KOSDAQ market, institutions net bought 206.8 billion won, lifting the index. Individuals and foreigners net sold 163.7 billion won and 30.1 billion won, respectively. Semiconductor equipment stocks were strong, including Jusung Engineering (036930) (27.22%), Wonik IPS (240810) (29.93%), and Leeno Industrial (058470) (7.33%).
In the securities industry, some assess that while short-term volatility is inevitable, it is difficult to say the existing upward trend has been damaged. Han Ji-young, a researcher at Kiwoom Securities, analyzed, "Over the past 20 trading days, the KOSPI's average daily high-low range has been 4.2%, above the 3.0% average since the start of the year," adding, "Unlike past crises, this volatility is upward volatility occurring within a bull market." He explained that the semiconductor-driven KOSPI earnings momentum and low valuation burden are still ongoing, forming the foundation of the current bull market.
