On August 1, South Korea’s benchmark KOSPI index plunged, falling sharply to the 3,110 level as investor sentiment soured in response to the government's newly proposed tax reforms.
The KOSPI closed at 3,119.41, down 126.03 points or 3.88% from the previous session. It marked the sharpest single-day decline since April 7, when the index had dropped 5.57% following the U.S. announcement of reciprocal tariffs. The index opened at 3,210.32, down 35.12 points or 1.08%, and extended losses throughout the session.
As of 3:30 p.m., the Korean won was trading at 1,401.4 per U.S. dollar in the Seoul foreign exchange market, up 14.4 won from the previous day. This marks the first time since May 14 that the closing exchange rate exceeded the 1,400-won threshold on a weekly basis.
On the main board, foreign investors and institutions net sold 660.2 billion won and 1.072 trillion won, respectively, dragging the index lower. Retail investors stepped in with net purchases of 1.6324 trillion won, engaging in bargain hunting. Foreign investors also net sold 701.2 billion won in KOSPI 200 futures.
While investors initially monitored the economic implications of the Korea-U.S. tariff agreement reached a day earlier, the government’s tax reform proposals exerted further downward pressure on the market.
After the market closed on the previous day, the Ministry of Economy and Finance unveiled its tax reform plan, which includes lowering the threshold for major shareholders subject to capital gains tax from 5 billion won to 1 billion won, and introducing a top 35% tax rate for separate taxation of dividend income.
Lee Kyung-min, an analyst at Daishin Securities, noted, “The proposal to tighten capital gains tax criteria for major shareholders and scale back separate taxation of dividends has disappointed the market.” He added, “Although the Korea-U.S. tariff deal was finalized, the tariff levels matched those of competitor nations, leaving little room for a positive surprise.”
Lee Jae-won, an analyst at Shinhan Securities, echoed the sentiment: “The weakness in the Korean market today appears primarily driven by the tax reform proposal. The re-tightened capital gains tax threshold and the higher-than-expected 35% top tax rate on dividend income triggered investor disappointment.”
Additional selling pressure came from a surge in the won-dollar exchange rate, overnight losses in U.S. tech stocks, and hotter-than-expected U.S. personal consumption expenditures (PCE) data for June, which dampened hopes for a rate cut in September.
Among large-cap stocks, Samsung Electronics (005930) slid 3.50%, falling below the 70,000-won mark, while SK hynix (000660) plunged 5.67%, dropping below 260,000 won.
Financials also fell on tax-related concerns: KB Financial Group (105560) declined 4.42%, Shinhan Financial Group (055550) shed 4.26%, and Mirae Asset Securities (006800) slumped 6.13%.
Automakers Hyundai Motor (005380) and Kia (000270), which had gained early in the session, reversed course to finish down 1.41% and 1.47%, respectively. LG Energy Solution (373220) dropped 2.48%, and Hanwha Aerospace (012450) fell 5.72%.
Meanwhile, Hanwha Ocean (009540) rose 4.54%, and Hanwha Systems (272210) gained 0.84%.
Out of 935 stocks traded on the main board, 885—or 95%—ended in negative territory.
By sector, steel and materials (-8.03%), securities (-6.48%), medical precision (-3.68%), and chemicals (-4.62%) led the losses.
The KOSDAQ index also posted a sharp decline, losing 32.45 points or 4.03% to close at 772.79, breaching the 800-point level for the first time in 14 trading sessions since July 14. The drop marked the index’s steepest single-day fall since April 7, when it had declined 5.25%. The KOSDAQ opened at 796.24, down 9.00 points or 1.12%, and extended its losses throughout the session.
Foreign and institutional investors net sold 112.6 billion won and 141 billion won, respectively, while retail investors net bought 250.5 billion won.
Most top KOSDAQ components ended lower, including Alteogen (196170) down 7.05%, Ecopro BM (247540) down 3.42%, Ecopro (086520) down 3.25%, Peptron (087010) down 4.60%, and HLB (028300) down 4.06%.
Trading value amounted to 15.198 trillion won on the KOSPI and 4.729 trillion won on the KOSDAQ.
On August 1, South Korea’s benchmark KOSPI index plunged, falling sharply to the 3,110 level as investor sentiment soured in response to the government's newly proposed tax reforms.
The KOSPI closed at 3,119.41, down 126.03 points or 3.88% from the previous session. It marked the sharpest single-day decline since April 7, when the index had dropped 5.57% following the U.S. announcement of reciprocal tariffs. The index opened at 3,210.32, down 35.12 points or 1.08%, and extended losses throughout the session.
As of 3:30 p.m., the Korean won was trading at 1,401.4 per U.S. dollar in the Seoul foreign exchange market, up 14.4 won from the previous day. This marks the first time since May 14 that the closing exchange rate exceeded the 1,400-won threshold on a weekly basis.
On the main board, foreign investors and institutions net sold 660.2 billion won and 1.072 trillion won, respectively, dragging the index lower. Retail investors stepped in with net purchases of 1.6324 trillion won, engaging in bargain hunting. Foreign investors also net sold 701.2 billion won in KOSPI 200 futures.
While investors initially monitored the economic implications of the Korea-U.S. tariff agreement reached a day earlier, the government’s tax reform proposals exerted further downward pressure on the market.
After the market closed on the previous day, the Ministry of Economy and Finance unveiled its tax reform plan, which includes lowering the threshold for major shareholders subject to capital gains tax from 5 billion won to 1 billion won, and introducing a top 35% tax rate for separate taxation of dividend income.
Lee Kyung-min, an analyst at Daishin Securities, noted, “The proposal to tighten capital gains tax criteria for major shareholders and scale back separate taxation of dividends has disappointed the market.” He added, “Although the Korea-U.S. tariff deal was finalized, the tariff levels matched those of competitor nations, leaving little room for a positive surprise.”
Lee Jae-won, an analyst at Shinhan Securities, echoed the sentiment: “The weakness in the Korean market today appears primarily driven by the tax reform proposal. The re-tightened capital gains tax threshold and the higher-than-expected 35% top tax rate on dividend income triggered investor disappointment.”
Additional selling pressure came from a surge in the won-dollar exchange rate, overnight losses in U.S. tech stocks, and hotter-than-expected U.S. personal consumption expenditures (PCE) data for June, which dampened hopes for a rate cut in September.
Among large-cap stocks, Samsung Electronics (005930) slid 3.50%, falling below the 70,000-won mark, while SK hynix (000660) plunged 5.67%, dropping below 260,000 won.
Financials also fell on tax-related concerns: KB Financial Group (105560) declined 4.42%, Shinhan Financial Group (055550) shed 4.26%, and Mirae Asset Securities (006800) slumped 6.13%.
Automakers Hyundai Motor (005380) and Kia (000270), which had gained early in the session, reversed course to finish down 1.41% and 1.47%, respectively. LG Energy Solution (373220) dropped 2.48%, and Hanwha Aerospace (012450) fell 5.72%.
Meanwhile, Hanwha Ocean (009540) rose 4.54%, and Hanwha Systems (272210) gained 0.84%.
Out of 935 stocks traded on the main board, 885—or 95%—ended in negative territory.
By sector, steel and materials (-8.03%), securities (-6.48%), medical precision (-3.68%), and chemicals (-4.62%) led the losses.
The KOSDAQ index also posted a sharp decline, losing 32.45 points or 4.03% to close at 772.79, breaching the 800-point level for the first time in 14 trading sessions since July 14. The drop marked the index’s steepest single-day fall since April 7, when it had declined 5.25%. The KOSDAQ opened at 796.24, down 9.00 points or 1.12%, and extended its losses throughout the session.
Foreign and institutional investors net sold 112.6 billion won and 141 billion won, respectively, while retail investors net bought 250.5 billion won.
Most top KOSDAQ components ended lower, including Alteogen (196170) down 7.05%, Ecopro BM (247540) down 3.42%, Ecopro (086520) down 3.25%, Peptron (087010) down 4.60%, and HLB (028300) down 4.06%.
Trading value amounted to 15.198 trillion won on the KOSPI and 4.729 trillion won on the KOSDAQ.