The Korea Securities Dealers Automated Quotation (Kosdaq), South Korea’s secondary stock market, closed down by more than 4 percent on Monday, its steepest fall since the Brexit turmoil in June 2016, amid growing concerns over faster-than-expected rises in interest rates in the United States.

The Kosdaq closed 4.59 percent or 41.25 points lower on Monday at 858.22, posting its worst decline since June 24 2016, when the tech and bio-heavy index plunged 4.76 percent after Britain voted to leave the European Union. The country’s benchmark stock index Kospi also fell 1.33 percent or 33.64 points from the previous session to close at 2,491.75 on Monday.

The local markets stumbled as major stock indices in New York Stock Exchange plunged last week, including the Dow Jones industrial average with a fall of 2.54 percent on Friday. The sharp fall in U.S. equities came after the country’s strong job market data stoked concerns that the world’s biggest economy may hike policy rates faster than expected.

On Friday, the 10-year U.S. treasury yield jumped to a four-year high of 2.85 percent, up 7.9 basis points from the previous day. The bond yield has climbed 19.1 basis points over the past week. A speedy gain in bond yields negatively affects the stock market as higher interest rates mean higher borrowing costs.

Amid growing fears that the U.S. Federal Reserve may hike interest rates more than three times this year, market analysts project the Federal Reserve would up its benchmark rate at the Federal Open Market Committee meeting in March.

Until the latest correction, Korean stock markets have extended their rally since last year, with the Kospi index rising 21.8 percent on year for year 2017 and Kosdaq jumping 26.4 percent. Entering this year, Kosdaq topped 900 for the first time in 16 years.

By Shin Heon-cheol and Lee Eun-joo

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