The Korea Exchange (KRX) on Tuesday triggered a sell-side circuit breaker, halting trading for five minutes after a sharp drop in the KOSPI 200 Futures index amid market fears over U.S. and Israeli airstrikes on Iran. The index fell 5.09 percent to 890.05, marking the first such event since January 6. Escalating Middle East tensions are rippling through South Korea's stock market.
On Tuesday, March 3, 2026, the Korea Exchange (KRX) activated a sell-side circuit breaker after the KOSPI 200 Futures index plunged 47.75 points, or 5.09 percent, to 890.05 at 12:05 p.m., driven by market concerns over U.S. and Israeli airstrikes on Iran. The measure, which suspends selling for five minutes when the index drops 5 percent or more for at least one minute, was the first since January 6, according to Yonhap News Agency and The Korea Times.
The Middle East conflict has quickly affected South Korea's economy. Reports indicate that the U.S.-Israeli attack killed Iranian Supreme Leader Ayatollah Ali Khamenei, spiking global oil prices and raising fears of disruptions in the Strait of Hormuz. Carmakers Hyundai Motor, Kia, and KGM saw their shares close down 11.72 percent, 11.29 percent, and 5.81 percent, respectively, on the KOSPI. KGM, formerly SsangYong Motor, is particularly exposed, with Middle East exports comprising about 25 percent of its total last year.
In contrast, defense, refinery, and shipping sectors gained. LIG Nex1 hit its daily upper limit at 661,000 won ($451), fueled by demand for its M-SAM II missiles supplied to Saudi Arabia and the UAE. S-Oil's stock surged 28.45 percent to 141,300 won, benefiting from improved refining margins. Shipping firms like Heung-A Shipping, STX Green Logis, and HMM also rose sharply. Hana Securities analyst Chae Un-sam noted that a missile shortage could boost M-SAM II demand as a cost-effective alternative to the U.S. Patriot system. "Even if the war ends sooner than expected, Middle Eastern countries are likely to increase arms imports," Chae said.
Samsung Securities analyst Cho Hyun-ryul highlighted S-Oil's geopolitical advantage from operating in Asia. KB Securities analyst Kang Sung-jin added, "Disruptions to sea routes generally lead to higher freight rates, but gains may be limited unless the Hormuz blockade persists." An industry official warned, "If the U.S.-Iran conflict is prolonged, this will disrupt the carmakers’ logistics system in the Middle East, which does no good for enhancing their profitability."
The Korea International Trade Association cautioned that shipping costs on rerouted paths could rise 50 to 80 percent. This event underscores South Korea's vulnerability to geopolitical tensions in export-dependent sectors.
