The 1,891.81 point marked the lowest level since Feb. 17, 2016, and the first time the index dipped under 1,900 in more than three years -- since June 24, 2016, when it plummeted to 1,892.75.

Foreigners net sold Kospi shares worth 607.4 billion won ($500 million), while institutions net purchased 1.3 trillion won worth of shares on the main bourse.

The secondary, tech-heavy bourse Kosdaq extended its losses from Monday, closing down 3.21 percent at 551.5.

It saw its sharpest decline in 12 years Monday afternoon, plunging to 569.79, shedding more than 6 percent at one point and prompting the nation’s sole bourse operator, the Korea Exchange, to activate a sidecar, resulting in a brief suspension of trading.

The South Korean financial market has been rattled in recent weeks, and in recent days its performance has been at its worst.

The Korea Exchange held an emergency meeting early in the day, explaining that the stock market had plummeted on risks from the US-China trade war as well as Seoul’s current disagreement with Tokyo. It scheduled a meeting after monitoring the US and European markets, which saw hefty declines in their indexes on Monday (local time) as well.

The Dow Jones Industrial Average fell 2.9 percent to close at 25,717.74, while the S&P 500 dropped nearly 3 percent to 7,726.04. The Nasdaq Composite fell 3.5 percent to 7,726.04, resulting in the worst percentage drop for all three US indexes this year.

The percentage drop came as China’s devaluation of the yuan sparked fears that the US-China trade war could escalate further, with US President Donald Trump accusing Beijing of currency manipulation.

Analysts have warned that the escalating trade war between the two largest global economies will likely continue to have a negative impact on both the local and global financial markets.

“With the US-China trade war working as the strongest factor of uncertainty on the market, the Korea-Japan trade spat and Brexit continue to contribute to the volatility,” according to KTB Securities analyst Park Seok-hyun.

“There is a possibility that the return-on-equity will worsen along with a further economic slowdown.”

The South Korean won also stayed near its recent lows against the US dollar on Tuesday.

The local currency closed nearly flat at 1215.3 won against the US greenback.

By Jung Min-kyung (mkjung@heraldcorp.com)