The benchmark Korea Composite Stock Price Index (KOSPI) dived 73.94 points, or 3.87 percent, to settle at 1,834.33. Trading volume stood at 837.1 million shares worth 11.1 trillion won (9.2 billion U.S. dollars).
Unease over the COVID-19 spread sent the KOSPI sharply lower, as the World Health Organization (WHO) declared the novel coronavirus a global pandemic, prompting investors to sell off risky assets.
As of Thursday morning, the number of infected patients in South Korea topped 7,800, compared to over 12,000 in Italy and more than 2,000 in France and Spain.
The country planned to impose stricter immigration procedures on five more European countries, including Britain, France, Germany, Spain and the Netherlands, later this week in addition to Italy.
Worried by the COVID-19 pandemic, the KOSPI plunged over 5 percent in the trading, leading the bourse operator to activate a so-called sidecar for the first time in more than eight years.
The sidecar is imposed to halt program trading for five minutes when stock futures fluctuate more than 5 percent for at least one minute. The last time it was activated was in October 2011.
VKOSPI, a volatility index of the KOSPI 200 index, jumped 14.55 percent to 43.07, marking the highest close in about eight and a half years.
Foreigners dumped local stocks, while institutional and retail investors were net buyers.
Large-cap shares lost ground. Market bellwether Samsung Electronics slipped more than 2 percent, and memory chip giant SK Hynix diminished over 3 percent. Leading chemical firm LG Chem dropped more than 6 percent, while the most-used search engine Naver and top automaker Hyundai Motor closed lower.
The local currency fell sharply versus the dollar as sentiment got strong to shun risky currencies of emerging markets.
The won/dollar exchange rate advanced 13.5 won to finish at 1,206.5 won per dollar, marking the fastest increase in about seven months.
Bond prices ended mixed. Yields on the liquid three-year treasury notes lost 2.4 basis points to 1.062 percent, but the return on the 10-year government bonds added 1.8 basis points to 1.387 percent.
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