South Korean equities experienced another steep decline on Thursday, with a significant sell-off in technology stocks dragging down the broader market. Heightened tensions in the Middle East pressured investor sentiment, while the South Korean won strengthened against the US dollar.

The benchmark Korea Composite Stock Price Index (KOSPI) opened 4.45% lower and continued its descent, closing at 6,820.60 points. This represented a drop of 463.81 points, or 6.37%, from the previous session, after touching an intraday low of 6,730.87 points.

Following a more than 5% decline in the benchmark index, the Korea Exchange triggered the sidecar circuit breaker mechanism in the KOSPI market around 9:10 AM local time, temporarily halting program selling orders.

Adding to investor concerns, the Bank of Korea earlier in the day raised its benchmark interest rate by 25 basis points to 2.75%. This marked its first rate hike in three-and-a-half years, aimed at curbing inflationary pressures stemming from escalating tensions in the Middle East.

Simultaneously, new US strikes against Iran intensified geopolitical strains in the region, renewing fears over potential disruptions to energy supplies.

On the trading front, institutional and foreign investors were net sellers on Thursday, offloading stocks worth approximately 2.37 trillion won and 1.38 trillion won, respectively. In contrast, retail investors were net buyers, purchasing a net 3.66 trillion won worth of shares.