South Korean equities extended their decline on Tuesday, with the benchmark KOSPI index trading 1.1% lower at 6,190.
The sell-off marks a second consecutive session of losses, as investors grow increasingly concerned about the durability of the domestic economic recovery and the potential for further monetary tightening.
Market participants are ramping up bets on another interest rate hike from the Bank of Korea.
This repricing comes as financial conditions tighten domestically; recent data showed that South Korean banks raised the average interest rate on new household mortgage loans in May, reversing a downward trend observed in the previous month. The reversal in lending rates signals that borrowing costs for consumers are beginning to rise again, adding to the pressure on household balance sheets.
The downward pressure on the KOSPI has been sustained by selling from overseas investors, who have been net sellers in recent sessions.
This foreign outflow has weighed heavily on the index, even as major domestic names like Samsung Electronics attempted to provide some support.