By Reshma Kapadia
South Korea's " Squid Game market" has been on fire. The war in Iran is revealing the cracks inside.
The Kospi Composite index, South Korea's main benchmark, logged a 74% gain in 2025, making it the world's top-performing stock market. It held on to that honor for the first two months of this year, up 46%. Then the missiles started flying.
The Kospi fell 12% on Wednesday, recording its biggest one-day drop, a dramatic response tied to oil and Iran. U.S. investors in the iShares MSCI South Korea exchange-traded fund lost 16% over the past four days, while the S&P 500 index was essentially flat.
To understand why Korean stocks are selling off so hard, investors need to understand its benchmark index. The biggest winners in the most-winning market have been memory chip makers Samsung Electronics and Hynix. Both are energy intensive -- a problem now that the Iran war has caused oil prices to spike. Almost 70% of South Korea's oil imports and 16% of its liquefied natural gas come from the Middle East, according to Barclays analysts.
The jolts haven't soured many bulls. Charlie Linton, Asia equity portfolio manager at asset management firm Ninety One, describes the declines as a momentum reversal rather than structural problem. Margins for memory chip makers have significantly increased with severe supply constraints at a time of increased demand for artificial intelligence. Another positive: increased demand for South Korea's asset-heavy companies -- shipbuilding, shipping, defense, and electric energy -- as the country pushes for great national security and self-reliance.
The domestic interest in the market earned it the nickname of the " Squid Game" market, teeing off the Netflix series of high-stakes risk taking. Indeed, on Wednesday, Société Générale analysts noted volatility in South Korea's market at a level last seen during the global financial crisis that started in 2007.
If you play with squid, be ready for the ink.
Write to Reshma Kapadia at reshma.kapadia@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
By Reshma Kapadia
South Korea's " Squid Game market" has been on fire. The war in Iran is revealing the cracks inside.
The Kospi Composite index, South Korea's main benchmark, logged a 74% gain in 2025, making it the world's top-performing stock market. It held on to that honor for the first two months of this year, up 46%. Then the missiles started flying.
The Kospi fell 12% on Wednesday, recording its biggest one-day drop, a dramatic response tied to oil and Iran. U.S. investors in the iShares MSCI South Korea exchange-traded fund lost 16% over the past four days, while the S&P 500 index was essentially flat.
To understand why Korean stocks are selling off so hard, investors need to understand its benchmark index. The biggest winners in the most-winning market have been memory chip makers Samsung Electronics and Hynix. Both are energy intensive -- a problem now that the Iran war has caused oil prices to spike. Almost 70% of South Korea's oil imports and 16% of its liquefied natural gas come from the Middle East, according to Barclays analysts.
The jolts haven't soured many bulls. Charlie Linton, Asia equity portfolio manager at asset management firm Ninety One, describes the declines as a momentum reversal rather than structural problem. Margins for memory chip makers have significantly increased with severe supply constraints at a time of increased demand for artificial intelligence. Another positive: increased demand for South Korea's asset-heavy companies -- shipbuilding, shipping, defense, and electric energy -- as the country pushes for great national security and self-reliance.
The domestic interest in the market earned it the nickname of the " Squid Game" market, teeing off the Netflix series of high-stakes risk taking. Indeed, on Wednesday, Société Générale analysts noted volatility in South Korea's market at a level last seen during the global financial crisis that started in 2007.
If you play with squid, be ready for the ink.
Write to Reshma Kapadia at reshma.kapadia@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
March 06, 2026 21:30 ET (02:30 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
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