KOSPI Faces 'Unstable Correction'... Rising Oil Prices Stall Earnings Forecast Momentum

On the 12th, the KOSPI index opened at 5567.65, down 42.30 points from the previous trading day. The current status of the domestic stock market was displayed on the electronic board in the dealing room of Hana Bank in Jung-gu, Seoul. On the same day, the won-dollar exchange rate started trading at 1480.1 won, up 13.6 won from the previous trading day. Photo by Kang Jinhyung, March 12, 2026.

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Following the war between the United States, Israel, and Iran, the Korean stock market, which had plummeted, has succeeded in a short-term rebound. However, experts point out that for a sustained upward trend, the stabilization of international oil prices is essential. There are also concerns that the outlook for Korean companies' earnings may be downgraded due to the aftermath of the war, and the increase in retail investors' leveraged investments is another destabilizing factor for the stock market.

On March 12, the KOSPI opened at 5567.65, down 0.75% from the previous trading day, and as of 9:41 a.m., it was trading at 5604.17, down 0.10%. The KOSDAQ started at 1132.00, down 0.42% from the previous close, but reversed course and was trading at 1149.98, up 1.16% as of 9:39 a.m.

The Korean stock market was also affected by the mixed results of the New York stock market overnight, as tensions between the United States and Iran persisted. On March 11 (local time), the Dow Jones Industrial Average fell 0.61% from the previous day, and the S&P 500 Index dropped 0.08%. The Nasdaq Composite Index rose 0.08%. On the same day, three ships near the coast of Iran were hit by projectiles believed to have been fired by the Iranian military. As a result of this news, the price of West Texas Intermediate (WTI) crude oil surged over 4%, which negatively impacted the stock market.

Experts believe that, given the heavy reliance of South Korea’s industry on oil prices, ongoing instability in international oil prices will act as downward pressure on the market. Park Sanghyun, a senior strategist at iM Investment & Securities, analyzed, "Either the blockade of the Strait of Hormuz must be lifted, or at minimum, a safe escort system for passage through the Strait of Hormuz must be established for oil prices to find a stable trend. If oil prices remain unstable, financial market volatility will persist."

Jung Haechang, a researcher at Daishin Securities, evaluated, "Both oil prices and stock indices are showing roller-coaster-like volatility due to communication issues from the White House regarding escort operations in the Strait of Hormuz and signs of Iran laying naval mines."

With the possibility of further market adjustments increasing due to geopolitical risks, there are also growing concerns that the earnings outlook for Korean companies may be revised downwards because of the war. According to financial information provider FnGuide, as of the previous day, the total operating profit estimate for KOSPI-listed companies-based on projections from at least three domestic securities firms-stood at 595.2849 trillion won, up just 1.6% from 585.7304 trillion won at the end of February. This is a steep decline compared to January, when the month-on-month growth rate of operating profit estimates for KOSPI-listed companies reached 47%, and February’s figure of 33.3%.

Looking at individual sectors, industries that are heavily affected by the surge in international oil prices following the war are seeing a clear downward trend in earnings forecasts. Companies in the energy sector-including Korea District Heating Corporation, SK Gas, SK E&S, and Korea Plant Service & Engineering (KPS)-have seen their earnings outlooks downgraded. The shipbuilding, maritime transportation, and textile sectors have also experienced downward revisions in profit forecasts. If oil prices continue to rise, this trend of lower earnings estimates is expected to persist, particularly for industries sensitive to high oil prices.

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The recent surge in retail leveraged investing-referred to as "Bittu" (borrowing to invest)-is also a destabilizing factor for the stock market. According to the Korea Financial Investment Association, as of March 5, the outstanding balance of margin loans reached an all-time high of 33.7 trillion won.

The outstanding margin loan balance is the amount that investors have borrowed from securities firms to invest in stocks but have not yet repaid. During the three days of high volatility starting March 3, when the Iran war first impacted the stock market, this balance set new records every day. As of March 10, it had decreased to 31.8 trillion won, but it remains at an elevated level.

Outstanding receivables from discretionary trading, classified as ultra-short-term leveraged investments, also reached an all-time high of 2.1487 trillion won as of March 5. This figure has roughly doubled compared to before the outbreak of war. In these transactions, investors borrow money from securities firms to buy stocks and must repay within two trading days. If they fail to do so, their stocks are forcibly sold on the third trading day, which carries a high risk of forced liquidation.

As leveraged investments have increased, the Financial Supervisory Service has summoned executives in charge at major securities firms to strengthen risk management. On the previous day, the Financial Supervisory Service held a meeting at the Korea Financial Investment Association with executives responsible for margin loans at 11 major securities firms to discuss strengthening risk management systems related to leveraged investing and measures to enhance investor protection.

Hwang Seono, Deputy Governor of the Financial Supervisory Service, stated, "If stock market volatility increases, leveraged investments could become a market risk factor," and emphasized, "Securities firms need to proactively respond by strengthening investor protection and risk management systems."

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