The benchmark KOSPI fell 6.37 percent or 463.81 points to close at 6,820.60, giving up the previous day's gains and slipping back below the 7,000 mark.
The BOK raised its benchmark interest rate by 25 basis points to 2.75 percent, its first rate increase in three and a half years. The decision came as semiconductor shares remained under heavy selling pressure.
Foreign investors sold 1.38 trillion won (US$932 million) worth of KOSPI shares, while institutions unloaded 2.37 trillion won. Retail investors purchased 3.66 trillion won. A sell-side sidecar was triggered at around 9:10 a.m. after program selling accelerated.
Semiconductor heavyweights led the decline. SK hynix tumbled 11.5 percent to 1,842,000 won, while Samsung Electronics dropped 8.8 percent to 255,000 won. Hanmi Semiconductor fell 10.0 percent as selling spread across the AI semiconductor supply chain. Hansol Technics and Daeduck Electronics also finished sharply lower.
But not all sectors moved lower. Hanwha Ocean rose 5.7 percent after work officially began on the 390-megawatt Shinan Ui offshore wind farm, where the company will supply a wind turbine installation vessel and an offshore substation.
Losses spread across the broader market, with electronics, manufacturing and machinery among the weakest sectors. Selloffs also pushed the benchmark back below the 7,000 level a day after it had reclaimed the mark.
The tech-heavy KOSDAQ dropped 4.53 percent to close at 791.84 after trading between 786.59 and 816.47. Foreign investors sold 303.6 billion won and institutions unloaded 156.2 billion won, while retail investors bought 446.7 billion won. A sell-side sidecar was triggered at 10:20 a.m. as selling pressure intensified.
Among KOSDAQ movers, Onconic Therapeutics surged 20.0 percent after announcing that research on its endometrial cancer drug candidate was published in an international medical journal. HLB gained 1.7 percent, bucking the broader market. Kolon TissueGene plunged 20.3 percent, while Jusung Engineering fell 10.3 percent. Wonik IPS lost 1.3 percent and PSK declined 4.5 percent as weakness spread across semiconductor equipment makers.
The Korean won strengthened against the U.S. dollar, closing at 1,480.4 won.
Japan's Nikkei 225 fell 2.8 percent, while Shanghai's Composite Index lost 2.0 percent. Hong Kong's Hang Seng Index rose 1.2 percent.
Brent crude traded around $84.7 a barrel, while West Texas Intermediate hovered near $79.5 a barrel as investors monitored developments in the Middle East.
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