2026 Weekly KOSPI·KOSDAQ Market Review: 03/03–03/07

KOSPI Weekly Change: -8.4% (5,579→~5,110) | March 3–7, 2026 Following an unprecedented shock from a full-scale Middle East war that sent the index down -18.4% over two days, an historic rebound driven by ceasefire negotiation rumors capped an extraordinarily volatile week.

---

Weekly Market Summary

Monday 3/3 — "Black Monday Redux", Sell-Side Circuit Breaker Triggered

The shock delivered over the weekend exceeded all expectations. On the dawn of February 28 (Friday), the U.S. and Israel jointly conducted precision strikes on Iranian nuclear facilities under the officially confirmed operation "Operation Epic Fury," plunging global financial markets into panic. The moment the market opened on Monday, the KOSPI dropped vertically. With foreign and institutional investors both hitting the sell button simultaneously, the index plummeted -10.8% from 5,579 to 4,976, while the KOSDAQ fell -9.2%. A sell-side circuit breaker was triggered around 9:20 AM, halting program trading for five minutes, but even after trading resumed the losses barely narrowed. Fears of a Strait of Hormuz blockade combined with a surge in international oil prices rekindled structural concerns about South Korea's heavy dependence on energy imports. In a single day, roughly ₩280 trillion in KOSPI market capitalization was wiped out.

Tuesday 3/4 — Panic Selling Round 2, KOSDAQ Breaks Below 1,000

Overnight news of Iran's retaliatory response pushed the fear index one notch higher. The KOSPI broke through the previous day's support and fell an additional -7.6% from 4,976 to 4,597, while the KOSDAQ plunged -8.7%, breaching the 1,000-point level (978 points). The two-day cumulative declines—KOSPI -18.4%, KOSDAQ -17.9%—set unprecedented records. U.S. equities also fell but with relatively smaller losses, while the KRW/USD exchange rate broke through 1,500, making the crisis of confidence in Korean assets all the more visible. Market analysts were quick to call it an "extreme manifestation of the Korea Discount," while margin calls on retail investors and stop-losses on leveraged ETFs amplified the selloff.

Wednesday 3/5 — "Historic Spring Rebound", Buy-Side Circuit Breaker Triggered

What reversed the market was a single line from an early-morning overseas newswire. After Reuters reported that back-channel ceasefire talks between the U.S. and Iran were underway through CIA-VAJA contacts, the KOSPI surged +9.63% from the opening, rocketing from 4,597 to 5,583.90. The KOSDAQ was even more dramatic, jumping from 978 to 1,116.41 for a +14.10% gain, triggering a buy-side circuit breaker. Foreign investors shifted to massive net buying, and short-covering by players who had built short positions over two days amplified the rebound. Quant screening's top picks on the day were dominated by semiconductor equipment stocks such as PSK Holdings and Cymechs, alongside low-PBR value stocks that had been excessively beaten down by the war shock.

Thursday 3/6 — Profit-Taking Emerges, Sector Rotation Picks Up

Fatigue from the prior session's explosive rebound set in from the opening, and the KOSPI entered a consolidation phase. Profit-taking flowed out of large-cap IT and semiconductor names, while global AI chip stocks including AVGO and AMAT remained 10–20% below their highs, capping further upside in their domestic peers. Meanwhile, sector rotation into war-beneficiary names became more pronounced. Defense stocks led by Hanwha Aerospace and LIG Nex1 hit consecutive 52-week highs, while energy and refinery stocks continued to outperform amid elevated oil prices. The utilities sector also saw defensive inflows and posted relative strength. Overall trading volume shrank sharply to 0.2–0.5x its 20-day average, signaling a wait-and-see mentality that dominated as the market awaited the next directional cue.

Friday 3/7 — Global Wait-and-See, Searching for Direction

The final trading day of the week ended with a cautious, low-volume session. Wariness ahead of the U.S. non-farm payroll release and the absence of concrete progress in Middle East talks prompted both buyers and sellers to hold back from building aggressive positions. The KOSPI hovered in a narrow range between 5,100 and 5,200, closing out the week's trading. Large-cap semiconductor stocks attempted a modest recovery but failed to find direction, while defense and energy names drifted sideways after the previous session's strength. For the week overall, the KOSPI closed down approximately -8.4% and the KOSDAQ -5.0%, leaving a significant portion of the shock unresolved and carrying it into the following week.

---

Sector Trends

Outperforming Sectors

Defense & Defense Industry: The week's biggest beneficiary sector. Hanwha Aerospace, LIG Nex1, and Hyundai Rotem surged in tandem, posting consecutive 52-week highs. Hopes for new orders exploded as the Middle East conflict and Europe's rearmament trend converged. This was the week the war began to be perceived not as an "event" but as a "structural shift."

Energy & Refining: Strait of Hormuz anxiety supported international oil prices, and S-Oil, HD Hyundai Oilbank, and GS Caltex-affiliated names posted gains. Concerns over disruptions to Iranian crude supply translated into expectations for expanded refining margins.

Utilities: Amid global uncertainty, defensive capital flows drove relative outperformance in Korea Electric Power and Korea Gas Corporation. The AI data center electricity demand theme also provided a positive backdrop.

Shipbuilding: The combination of shipping freight volatility from the conflict and expectations for naval vessel orders benefited HD Korea Shipbuilding & Offshore Engineering and Samsung Heavy Industries, which joined defense names as rotation beneficiaries.

Underperforming Sectors

AI & Semiconductors: Samsung Electronics, SK Hynix, and Hanmi Semiconductor were at the epicenter of Monday and Tuesday's selloff. Even after Wednesday's rebound, further upside momentum was limited. Foreign buying was slow to return, and the ongoing correction in global AI chip stocks kept sentiment cautious.

Consumer Goods & Retail: Concerns about consumer sentiment dampening due to the war weighed on domestic consumer goods and retail names. Rising inflationary pressures further dragged down earnings outlooks.

Airlines & Travel: Korean Air and Asiana Airlines fell sharply due to disruptions to Middle Eastern routes and weakened travel sentiment.

---

Notable Stocks of the Week

The common pattern captured by quant screening during Wednesday's rebound was low PBR + trading volume surge + simultaneous institutional and foreign net buying. Among the stocks that fell the most during the panic selling, value stocks whose fundamentals remained intact posted outsized returns during the recovery.

---

Next Week Outlook & Key Variables

Scenario 1 — Ceasefire Talks Advance (Probability: 35%)

If the CIA-VAJA channel produces a concrete agreement or the UN Security Council passes an emergency resolution, the KOSPI could attempt to reclaim the 5,800–6,000 range. A full return of foreign buying and recovery in oversold AI semiconductor names are expected to follow.

Scenario 2 — Uncertainty Persists (Probability: 45%)

If the status quo holds without front-line escalation amid stalled negotiations, the KOSPI is likely to stay in a 5,000–5,600 trading range, with defense and energy leading and AI semiconductors consolidating in a rotation-driven market.

Scenario 3 — Conflict Escalation (Probability: 20%)

In a worst-case scenario—Iran actually closing the Strait of Hormuz, or a Hezbollah front opening—a retest of KOSPI 4,200–4,500 must be kept on the table.

Key Variables to Watch:

• Progress in U.S.-Iran ceasefire negotiations (early week will be the pivot point)
• U.S. FOMC minutes and March rate direction (scheduled for release on the 12th)
• Whether WTI crude holds above the $90 level
• Speed of foreign investor return to net buying in the KOSPI
• KRW/USD exchange rate stability (whether 1,480 holds as support)

---

Investor Action Guidelines

1. Maintain Cash Position, Scale In Gradually What this week confirmed is that the volatility of geopolitical events exceeds the speed of human judgment. Rather than attempting to time the bottom, a strategy of maintaining 30–40% cash and scaling in gradually is the sound approach.

2. Hold Defense, Energy, and Utilities Weightings It is reasonable to retain defensive sector exposure in the portfolio to partially reflect the scenario that the conflict is a structural shift rather than a short-term event. However, avoid chasing names that have already surged sharply.

3. AI Semiconductors Are in a Gradual Accumulation Zone Samsung Electronics and SK Hynix have reached more attractive valuations. However, scale into positions in 2–3 tranches while monitoring whether the global AI investment cycle is impaired. Do not go all-in at once.

4. Avoid Leveraged and Inverse ETFs During periods of extreme volatility, compounding losses accelerate in leveraged products. Even if you profited this week, be sure to reduce positions and prioritize risk management next week.

5. Do Not React Immediately to Ceasefire News Chasing the market after it surges on unconfirmed rumors—as it did on Wednesday—is dangerous. It is not too late to add positions after waiting for an official announcement and observing the market's reaction for 2–3 days.

Conclusion: This week will be recorded in the history of the Korean stock market. This extreme case—where panic and greed alternated within 72 hours—demonstrated once again how useful quant and AI screening can be as a compass in the face of geopolitical risk. Next week calls for a cool head, keeping a close eye on the news flow from the negotiating table.