KOSPI plunges below 5,000 on Warsh shock

Feb 03, 2026, 08:01 am

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A trading screen at Hana Bank’s dealing room in central Seoul shows the KOSPI closing at 4,949.67 on Feb. 2, down 274.69 points from the previous session, breaking below the 5,000 mark. The KOSDAQ also fell 51.08 points, or 4.44%, to 1,098.36. / Photo by Park Sang-seon

South Korea’s benchmark KOSPI fell more than 5% on Sunday, breaking below the psychologically important 5,000 level, as investor sentiment deteriorated following what market participants dubbed the “Warsh shock.”

The selloff came after U.S. President Donald Trump nominated former Federal Reserve governor Kevin Warsh, widely regarded as a hawk, as chair of the Federal Reserve. A wave of profit-taking also added pressure, analysts said.

According to the Korea Exchange, the KOSPI closed at 4,949.67, down 274.69 points, or 5.26%, from the previous session. Foreign investors and institutions dumped shares worth 2.52 trillion won and 2.21 trillion won, respectively.

The most heavily sold stock by foreign investors was SK hynix, with net selling totaling 1.45 trillion won on the day.

Market analysts attributed the plunge to uncertainty surrounding future U.S. monetary policy following Warsh’s nomination. Concerns mounted that the Federal Reserve’s policy direction could become less predictable, dampening risk appetite.

Kwon Hee-jin, an analyst at KB Securities, said the nomination could heighten market volatility. “With Warsh’s appointment, areas such as the measurement of economic activity and productivity, and the Fed’s interpretation of them, may remain ambiguous,” she said. “The fading expectation of liquidity provision by the Fed increases volatility risks.”

Experts also pointed to aggressive profit-taking, particularly in stocks that had surged earlier this year, including semiconductor shares, after the KOSPI’s rapid rally in recent months.

Meanwhile, a sell-side circuit breaker — which temporarily halts program sell orders — was triggered on the KOSPI at 12:31 p.m., marking the first activation of a sell-side circuit breaker in the market this year.

#KOSPI #Wash shock #Kevin Warsh #Federal Reserve #Donald Trump